Jul 9, 2014 3 min read

NEW YORK – As companies begin reporting their second-quarter results, investors will be looking for signs the strengthening U.S. economy has translated into higher sales and profits. Analysts expect earnings increased 6.6 percent in the three months through June compared with the previous year, according to S&P Capital IQ, a research firm.

Investors argue that with stocks trading near all-time highs, it’s now up to companies to show whether or not these record high prices can be justified.

“Stocks are not cheap, and we need to be assured that these companies’ growth is going to continue,” said Quincy Krosby, market strategist with Prudential Financial.

Alcoa issued a strong report this week. The next big name will be major U.S. bank Wells Fargo, which reports Friday. The bank is one of the country’s biggest mortgage lenders, and investors will be looking for Wells’ outlook on housing.

“I’m looking for a good, but not a great, earnings season,” said Michael Fredericks, portfolio manager of the Multi-Asset Income Fund at BlackRock. “We really need to see the guidance from companies, if management teams are as upbeat as the market.”

The Dow Jones industrial average rose 78.99 points, or 0.5 percent, to 16,985.61. The S&P 500 index rose 9.12 points, or 0.5 percent, to 1,972.83 and the Nasdaq composite rose 27.57 points, or 0.6 percent, to 4,419.03.

The market kept up its positive momentum following the latest report from the Federal Reserve.

Policymakers at the Fed have come up with a rough timetable for when the central bank’s bond-buying program will wind down, according to minutes from the bank’s most recent meeting. They generally agreed that the program will end in October, if the economy continues to improve at this pace, with a $15 billion reduction in monthly bond purchases.

The Fed is currently buying $45 billion a month in bonds and has been cutting back by $10 billion a month at each meeting since December. The program is designed to keep interest rates low to stimulate borrowing and economic activity.

In company news:

• American Airlines rose $1.73, or 4.3 percent, to $41.98. The world’s largest airline raised its sales forecast for the second quarter, typically the busiest time of year. The news helped lift other airline stocks, including Delta, which rose 1.5 percent. Airline stocks had taken a beating earlier this week.

• The Container Store, which went public less than a year ago, plunged $2.27, or 8 percent, to $24.80. CEO William Tindell warned that the company was in a “retail funk” and that the sluggish sales of the winter seemed to be lingering into the spring and summer.