Stocks Adding to Friday's Rally, Flood of Earnings Data Looms

U.S. stocks are extending a late last-week rally, with Q4 earnings season set to shift into high gear. Also, the markets are looking to next week's Fed monetary policy decision, with the Central Bank expected to slow down on their tightening campaign, bolstered by a tenth-straight monthly decline in the Leading Economic Index. Treasury yields are mostly rising, and the U.S. dollar is nudging higher. Crude oil prices are gaining ground and gold is seeing some pressure. Equity news is relatively light before the week’s earnings storm, with Elliott Investment Management reportedly taking a multi-billion dollar stake Dow member Salesforce, and Evoqua Water Technologies agreeing to be acquired by Xylem Inc. for roughly $7.5 billion. Asia finished higher though several markets were closed for the Lunar New Year holiday, and Europe remains mostly in the green.

At 10:51 a.m. ET, the Dow Jones Industrial Average is up 0.7%, the S&P 500 Index is gaining 1.0%, and the Nasdaq Composite is rallying 1.5%. WTI crude oil is increasing $0.46 to $82.10 per barrel, and Brent crude oil is advancing $0.81 at $88.44 per barrel. The gold spot price is trading $7.20 lower to $1,921.00 per ounce, and the Dollar Index is ticking 0.1% higher to 102.10.

Dow member Salesforce Inc. (CRM $157) is rising after reports that hedge fund Elliott Investment Management has taken a multi-billion dollar stake in the enterprise software company. Bloomberg reported that Elliott said it looks forward to working constructively with Salesforce to realize the value befitting a company of its stature.

Evoqua Water Technologies Corp. (AQUA $46) is rallying after agreeing to be acquired by Xylem Inc. (XYL $100) in an all-stock transaction that reflects an implied enterprise value of about $7.5 billion. Shares of XYL are trading solidly lower.

Q4 earnings season is expected to shift into high gear this week and investors continue to grapple with the ultimate impact of aggressive Fed actions to try to combat rising prices. Schwab’s Chief Investment Strategist Liz Ann Sonders notes in our latest Schwab Market Perspective: Slowdown or Recession?, how although it's possible the Federal Reserve will guide the economy to a "soft landing," evidence has been pointing toward recession.