Stocks on Wall Street opened higher on Monday, suggesting that the recent rally was intact despite concerns that the Federal Reserve could curtail its stimulus for the economy sooner than many expected.
The Standard & Poor’s 500-stock index added 0.4 percent in morning trading, the Dow Jones industrial average rose 0.3 percent and the Nasdaq composite index jumped 0.5 percent.
Barnes & Noble stock jumped 13 percent after its chairman, Leonard Riggio, said he was considering a bid for the company’s bookstore business.
Stocks have been strong performers so far this year, with the S.&P. 500 up 6.2 percent to around its highest levels since 2007. That has prompted many to predict a pullback, but so far declines have been neutralized as investors use any dip as a buying opportunity. While the S.&P. fell last week, the decline was a slight 0.3 percent and was the first weekly drop after a seven-week string of gains.
“People are cautious about investing near five-year highs, especially given the pace at which we got here, but there’s still room to grow and any pullback should be shallow,” said Robert Pavlik, chief market strategist at Banyan Partners in New York.
The gains have come on strong corporate earnings. With 83 percent of the S.&P. 500 having reported results, 69 percent of beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.
Another test for equities will come with the looming debate over massive United States budget cuts that will take effect on Friday if lawmakers fail to reach an agreement over spending and taxes. The White House issued warnings about the harm the cuts, referred to as sequester, are likely to inflict on the economy if enacted.
More government-related uncertainty came from Italy, where a close election left questions about how the country would handle its three-year debt crisis. Still, European shares were higher on Monday, rising about 1 percent after a smooth Italian debt auction.
Lowe’s Cos. reported earnings that beat expectations, helped by rebuilding efforts after Hurricane Sandy in the United States. Shares rose 0.6 percent.
Dynavax Technologies shares plunged 27 percent after the Food and Drug Administration denied approval for the company’s adult hepatitis B vaccine and sought additional data for evaluate its safety.
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