Stocks were down on Monday, even as the price of oil fell. Traders are gearing up for a week full of economic releases.
In the midday trade, the
Dow Jones Industrial Average
was down 291 points, or 0.8%. the
fell by 0.4%, while
fell 0.3% after being in the green early in the session.
One of the biggest moves was in the oil market, where the price of WTI crude oil fell 6% to around $106 a barrel. It’s still above the $89 level it was at in February just before it became imminent for Russia to invade Ukraine, but below the multi-year high of $130 reached in early March. Weighing down on the price of oil, for the moment, it is a wave of Covid-19 in China that has led to new lockdown measures in Shanghai, the largest city and financial center, reducing demand for crude.
Tech stocks outperformed on Monday, continuing a recent trend. The Nasdaq is up about 13% since March 14, the low point of its recent decline. That’s better than the S&P 500’s 9% gain since its recent low reached earlier this month.
Fear that the Federal Reserve’s upcoming interest rate hikes could slow the economy helped tech stocks. When this happens, more economically sensitive stocks often perform poorly, as investors pile into fast-growing tech innovators. And when economic demand slows, inflation usually ends up doing the same, capping any increase in long-term bond yields. Lower bond yields make future earnings more valuable, and many growth and technology stocks are valued on the basis that they will produce significant earnings many years into the future.
As for the S&P 500, a rise to 4,587.77 would represent a 10% gain from its closing low this year, signaling the end of the correction, although others define exiting correction territory. like the index returning to its maximum level. record time, which he reached at the beginning of January. When the S&P 500 hit its closing low in early March, it was deep in correction territory, defined as a 10% decline or worse. The index has recouped some of its recent losses to trade at just under 4,550 currently, although it has never been in bearish territory, defined as a 20% drop.
From the broader market perspective, this week will be important for markets as they attempt to assess the state of the economy.
The biggest release comes Friday, when the Bureau of Labor Statistics releases the March jobs report. Economists expect 460,000 jobs to have been added, down from February’s result of 678,000. But the expected March figure is not something to be scoffed at – and a labor market strong will only encourage the Fed to raise interest rates by half a percentage point, rather than a quarter point, in May to combat high inflation.
“A strong report (and especially a low unemployment rate) will prompt the Fed to hike 50 basis points in May and possibly June,” wrote Tom Essaye, founder of Sevens Report Research.
This type of aggressiveness on the part of the Fed is well understood by the markets at this stage. Earlier this month, the central bank announced plans to raise rates seven times this year and more next year, and Fed governors have hinted at the possibility of doing even more in recent days.
Elsewhere, markets will get a sense of consumer spending this week. Nominal consumer spending, which represents prices paid by consumers, hits the wires on Thursday. Economists expect spending rose 0.7% month-over-month in February, compared with a 2.1% increase in January.
Overseas, the pan-European
increased by 0.1%, and the
ended less than 0.1% higher, eliminating earlier losses.
In the digital asset space,
and other cryptocurrencies have continued their price momentum since late last week with a firm rally on Monday. The price of Bitcoin, the largest crypto, rose around 6% to almost $47,000, after trading just above $40,000 last week.
Here are seven stocks in motion on Monday:
(AAPL) fell 0.7%. This followed a Nikkei Asia report that said
expects to manufacture around 20% fewer iPhone SEs in the next quarter. Shares of the tech giant’s suppliers also fell, with
(QRVO) down 3.7% and
(QCOM) 1.4% less.
Shares in cigarette manufacturers
(MO) declined by 2.1% and 3.1%, respectively, while
(WMT) plans to end cigarette sales in some US stores, The Wall Street Journal reported, citing people familiar with the matter.
(TSLA) gained 7.5% after taking steps to allow it to split its shares.
Deere & Co.
(DE) stock fell 1.3% even after being upgraded from underweight to neutral at JPMorgan.
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