Stocks gained on Monday, with investors at least temporarily looking past concerns over the growth outlook and ahead to more second-quarter earnings. 

The S&P 500, Dow and Nasdaq each eked out record intraday and closing levels, shaking off earlier declines. 

Over the past several weeks, investors have been appraising the likelihood that the spread of the Delta variant would derail the economic recovery and curb the rally so far for the year-to-date in U.S. equities. These concerns set off a rout last week, with stocks dropping by the most since October before ending the week at record levels.

However, some strategists suggested the latest stretch of virus-related volatility in markets would prove temporary.

“We think the Delta variant should pose a minimal risk to the U.S. equity market,” Goldman Sachs U.S. equity strategist David Kostin wrote in a note Monday. “From an economic perspective, widespread vaccinations and strategies focused on containment suggest limited medical and economic downside even if infections continue to rise.”

“From a flows perspective, robust household cash balances and corporate buyback authorizations should continue to support inflows for equities, increasing the likelihood that market participants perceive a pullback as a buying opportunity,” he added.

Later this week, investors will hear from Federal Reserve officials over the path forward for monetary policy, which will likely be informed by the increased concerns over the Delta variant and peaking economic growth rates. Many are betting that these downside risks will overshadow worries over inflation, leaving central bankers in a wait-and-see mode before announcing any changes to their crisis-era asset purchase program and near-zero interest rate policies. 

“[Federal Reserve Chair Jerome] Powell’s mid-July Congressional testimony raised the prospect that the statement would introduce an asymmetric policy bias: standing prepared to adjust policy if the Fed ‘saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal,'” JPMorgan economist Michael Feroli wrote in a note. 

“Since that testimony the rise of the delta variant has injected some downside growth risks into the outlook, and this should help the doves argue for retaining the current symmetric policy bias,” which would focus on creating conditions to maximize employment while also keeping inflation in check, he added. 

Traders are also set to focus on a packed schedule of corporate earnings results this week, which will include mega-cap technology companies like Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) in addition to a host of other companies including UPS (UPS), 3M (MMM), Starbucks (SBUX) and Boeing (BA). 

Earnings season so far has been especially strong, helping support the indexes’ march to new all-time highs even in light of recent economic concerns. So far, 24% of companies in the S&P 500 have reported second-quarter results, and of these, 88% have topped Wall Street’s earnings per shares estimates, according to an analysis from FactSet as of Friday. The blended earnings growth rate for the blue-chip index, which includes both companies’ reported growth rates and the estimated rates for the companies have yet to report, stands at 74.2%, which would be the highest since the fourth quarter of 2009.

Emily McCormick·Reporter