Dow, S&P 500 close at record highs

U.S. stocks extended their record-setting rally and closed at new all-time highs Monday as investors were buoyed by an earnings beat from Bank of America and shrugged off a failed coup attempt in Turkey over the weekend.

Last week, the Dow Jones industrial average and Standard & Poor's 500 stock index notched fresh records for the first time in more than a year after trading in an up-and-down sideways pattern. The rally has been driven by signs of an improving U.S. economy, a decent start to the second quarter-earnings season for U.S. banks and a diminution of fears related to Britain's vote last month to exit the European Union. Also boosting sentiment is the hope that central banks around the world will continue to support markets in the wake of the 'Brexit' vote.

In a sign of the market's new resiliency and breakout from its 14-month trading range, it kicked off the week in the black, despite political instability in Turkey, last week's terror attack in the south of France, and the latest deadly killing of three U.S. police officers, this time in Baton Rouge over the weekend. The Turkish lira also was rebounding vs. the dollar after dropping over the weekend on the attempted coup.

The Dow rose 16.50 points, or 0.1%, to close at a record high of 18,533.05. The broader S&P 500 gained 5.15, or 0.2%, to a record close of 2166.89. The technology-dominated Nasdaq composite gained 26.19, or 0.5%, to 5055.78.

In a sign that risk-aversion is abating, the yield on the 10-year Treasury note jumped to 1.59% Monday, which is well above its recent low of 1.32% back on July 6.

"Stocks broke out of their trading range" last week, Gina Martin Adams, institutional equity strategist at Wells Fargo Securities, told clients in a note. "Generally better-than-expected bank earnings and economic reports, as well as continued speculation that central banks will support global uncertainty with ample liquidity, helped lead U.S. large cap stocks to new highs last week."

Are subpar returns in store for the Dow?

Wall Street's focus this week will be on corporate earnings and U.S. politics, as the Republican National Convention gets underway today in Cleveland.

On the earnings front, Bank of America (BAC), the nation's second-largest bank by assets, reported a drop in earnings, but still topped Wall Street's estimates on earnings per share and revenue. BofA shares were up 4% in afternoon trading.

Bank of America Q2 income falls 18% due to lower interest income

More than 90 companies in the S&P 500 are set to report earnings this week, according to Thomson Reuters. Currently, analysts are expecting earnings in the April-thru-June period to contract 4.5%, which would mark the fourth quarter in a row with negative profit growth. The hope on Wall Street is that the so-called "earnings recession" will end in the second quarter, paving the way for a resumption of profit growth beginning in the current quarter, which began July 1 and ends Sept. 30.

Earnings need to pick up, many Wall Street pros say, as the S&P 500 is now trading at 17.1 times its expected earnings over the next four quarters, which is well above the roughly 15 long-term average, Thomson Reuters data show.

Wall Street will also be closely monitoring the four-day political convention in Cleveland, where the GOP will likely anoint Donald Trump as its presidential nominee Thursday, the final night of the convention.

In global markets, stocks were mixed in Europe, with the broad Stoxx Europe 600 index rising 0.2%, shares in the FTSE 100 in London rising 0.4%, the DAX in Germany dropping 0.042% and the CAC 40 in Paris falling 0.3%. In Asia, stocks in Hong Kong rose 0.7%.