Stock Market Today: Dow Edges Higher, Twitter Pops, Starbucks Falls
Major stock indexes rose on Monday as tech stocks lifted the market and continued their recent outperformance.
Dow Jones Industrial Average
closed up 104 points, or 0.3%, while
increased by 0.8%, and the
advanced by 1.9%.
Tech stocks pushed the S&P 500 higher as the overall market value of tech names has the largest sector weighting in the index. The average index action, however, was not doing much. the
Invesco S&P 500 Equal Weight
The exchange-traded fund (RSP), which gives equal weight to each component of the index, gained only 0.2%
For the majority of the market, “equities continue to tread water on lingering concerns about slowing growth,” wrote Louis Navellier, founder of Navellier & Associates.
There’s little on the calendar in terms of data on how the market is moving, and corporate news is quiet ahead of the start of earnings season on April 13, with the release of earnings from
(symbol: JPM). The only real news to grab attention on Monday morning came from
Elon Musk, who bought a shipment of
(TWTR), sending shares of that company soaring.
That’s not exactly going to move the overall market, and in a vacuum, the focus will remain largely on the Federal Reserve and monetary policy. Investors will get an idea of the Fed’s thinking when the March FOMC meeting minutes are released on Wednesday.
What central bankers say about their plans to tackle high inflation, including the possibility of raising the benchmark policy rate by half a percentage point in May, will be front and center. The minutes could also reveal the central bank’s plans to reduce its bond holdings, which would put downward pressure on bond prices and boost their yields. This is another way for the Fed to increase borrowing costs.
“The big catalyst this week is Wednesday afternoon’s Fed Minutes, which should shed some light on the balance sheet reduction process,” New York Stock Exchange analysts wrote.
If the Fed indicates that it will reduce its balance sheet soon enough, “it will put a headwind on equities,” wrote Tom Essaye, founder of Sevens Report Research.
The bond market is already feeling these headwinds. Treasuries sold off, driving up their yields, but the 2-year rose faster than the 10-year, causing the yield curve to invert. This is a sign that the markets see the next rate hikes hitting economic demand. It’s not great for equities, but history shows that it can take more than 12 months for a recession to occur after the yield curve inverts, while the stock market can continue to earn during this time.
Additionally, the worrying signal from the bond market is providing some firepower for tech stocks. Investors often favor fast-growing tech stocks when the economic outlook darkens. Most stocks are showing weaker earnings growth while tech stock earnings are rising.
Monday’s tech outperformance isn’t necessarily a surprise, then, as the Nasdaq is now up nearly 15% from its 2022 low in mid-March. That beats the S&P 500’s 10% rise from its March low for the year. RBC strategists recently noted that growth and technology stocks often outperform the broader market when the Fed tightens monetary policy.
Overall, “concerns that the economy will struggle to cope with a rapid pace of tightening by the Federal Reserve remained at the forefront,” wrote Mark Haefele, chief investment officer of global wealth management at
gained 0.5%. that of Hong Kong
Hang Seng Index
jumped 2.1%, buoyed by news that a major regulatory hurdle for US-listed Chinese stocks, many of which are also listed in Hong Kong, was likely to be lifted.
Here are six stocks in motion on Monday:
Twitter soared 27% after Tesla (TSLA) CEO Elon Musk took a 9.2% passive stake in the social media company, according to a regulatory filing. Tesla stock gained 5.6%.
(SBUX) fell 3.7% after the company announced on Monday that it would suspend its share buyback program, effective immediately.
(NIO) jumped 6.6%, 7.1% and 9% respectively, in line with other U.S.-listed Chinese stocks, after China’s securities regulator said on Saturday it would ease its rules audit and strengthen its cooperation with foreign authorities. The move lifts the uncertainty that has plagued this group of stocks in recent weeks, including the prospect of mass delistings of Chinese companies in the United States due to a lack of accounting transparency.