U.S. stocks were off session highs but holding modest gains Monday, attempting a bounce after shifting rate expectations triggered Wall Street’s worst week of 2023.
How stocks are trading
- The Dow Jones Industrial Average DJIA, +0.41% was up 103 points, or 0.3%, at 32,921.
- The S&P 500 SPX, +0.58% advanced 20 points, or 0.5%, to 3,990.
- The Nasdaq COMP, +0.93% gained 94 points, or 0.8%, to trade at 11,490.
Stock indexes booked their biggest losses of 2023 last week. The Dow dropped 3% for its biggest weekly decline since the week ending Sept. 23, the S&P 500 retreated 2.7% for its third straight weekly fall and the Nasdaq fell 3.3%. The S&P 500 and Nasdaq saw their biggest weekly declines since the week ending Dec. 9.
What’s driving markets
Stocks were attempting to gain back some of the ground lost last week when equities fell amid further signs that relatively robust economic activity is helping keep inflation stubbornly high.
The PCE inflation measure released on Friday showed price pressures remain elevated, reducing the chances that the Federal Reserve will consider easing monetary policy anytime soon and thus forcing bond yields higher.
“Investors are coming to grips with rates being higher for longer and Friday’s hotter-than-anticipated inflation data effectively confirmed just that,” said Chris Larkin, managing director for trading at E-Trade from Morgan Stanley.
Data released Monday showed U.S. durable-goods orders fell 4.5% in January, coming in below forecast. Excluding transportation, sales were up 0.7%.
While the overall data showed orders were hardly falling off a cliff, a modest pullback in Treasury yields following the report was “all stocks needed to break the strong downtrend they had been in,” said Louis Navellier, founder of Navellier & Associates, in a note.
U.S. pending home sales rose 8.1% in January, according to the monthly index released Monday by the National Association of Realtors, with sales rising for the second month in a row. Pending home sales last rose by this much in June 2020, fueled by pandemic buying. Analysts polled by The Wall Street Journal had forecast the pending home sales index to rise by 0.9%.
Federal Reserve Gov. Phillip Jefferson on Monday said he doesn’t support raising the central bank’s 2% inflation target because it “would damage the central bank’s credibility.”
The S&P 500 has lost 4% over the past three weeks as the monetary-policy-sensitive 2-year Treasury yield TMUBMUSD02Y, 4.790% moved above 4.8%, near to 15-year highs. However, yields are a touch softer on Monday, and this is helping sentiment toward stocks as the week begins.
Still, Jonathan Krinsky, chief technical strategist at BTIG, is wary of further downside for stocks.
“While it was holiday shortened, the [S&P 500] suffered its worst decline of the year last week (-2.67%) as momentum continues to rollover. As a result, it essentially tested its 200 day moving average (3940) and got down to the high volume zone (3925-3950) of the last few years. While these areas are likely to provide some support in the near-term, we expect an eventual breakdown below which would open the door to Dec. lows (3775),” Krinsky wrote in a note to clients.
Companies in focus
- Shares of Seagen Inc. SGEN, +9.73% rose 10.2% after The Wall Street Journal reported Pfizer Inc. PFE, -1.57% was in talks to buy the cancer biotech for a premium to its $30 billion market cap. Pfizer’s stock fell 1.8%.
- Union Pacific Corp. UNP, +9.26% shares were up 9.5% after the railroad agreed to oust its chief executive just hours after a New York hedge fund urged it to do so.
Movers & Shakers: Seagen’s stock soars on reported Pfizer buyout interest; Union Pacific shares rally after CEO ouster
This article was originally published by Marketwatch.com. Read the original article here.
