S&P 500 and Nasdaq close lower; Dow inches higher
Market Summary and Key Highlights
The S&P 500 and Nasdaq Composite closed lower on Monday, while the Dow edged higher. This marked the second negative session in a row for both the S&P 500 and the Nasdaq. The Dow, on the other hand, managed to eke out a small gain.
Market Analysis
The broad S&P 500 and the technology-heavy Nasdaq closed 0.1% and 0.4% lower, respectively. This decline can be attributed to the negative sentiments and positioning in the market. The Dow, however, showed resilience and was able to post a modest gain of 0.1%.
Expert Opinion
UBS, a highly respected bank, believes that the market could potentially experience a retreat due to the elevated positioning and valuations, and the possibility of a correction in the near future. However, the bank also stated that investors should keep in mind the bigger picture and remain neutral on U.S. equities. UBS mentioned that long-term investments align with the positive drivers that are still in place, including healthy economic growth, lower inflation, and the positive impact of artificial intelligence on risk-on moves.
Oil prices mixed ahead of key inflation data
Industry News
Oil prices were mixed on Monday following a mixed outlook for global crude markets. Traders were awaiting new round of February inflation data and reports on the global crude outlook from OPEC and the International Energy Agency. The West Texas Intermediate (WTI) contract for April lost 8 cents, or 0.10%, and settled at $77.93 a barrel. The Brent contract for May added 13 cents, or 0.16%, and settled at $82.21 a barrel. The overall sentiment in the oil market remains cautious, with a focus on tepid demand in China and the market being well supplied this year, according to the International Energy Agency. The rejection of $80 a barrel for WTI has raised concerns whether the upward move is over.
Indexes Diverge as Final Trading Hour Commences
The three major indexes in the market showed mixed performance during the final hour of trading. The S&P 500 remained flat, the Dow added 0.1%, and the Nasdaq Composite declined 0.2%.
Equal-weighted S&P 500 Outperforms Market Cap-weighted Benchmark
Shift in Market Leadership
The equal-weighted S&P 500 Index set a new record last week, gaining 4% in the past month. In contrast, the market cap-weighted S&P 500 has only seen a 1.7% increase in the same timeframe. Market experts attribute this divergence to a shift in market leadership as some of the biggest technology companies continue to struggle and retreat, while smallcaps show outperformance. This shift indicates the potential for further market breadth and a broader range of outperforming assets, including short-cycle industrials, analog semis, and capital markets. Small caps are also expected to gain momentum.
Stocks Making the Biggest Moves Midday
Notable Companies in the Market
Several companies made significant moves in midday trading:
- Bally’s: Shares of Bally’s soared more than 25% after the company received a buyout proposal from hedge fund Standard General. The offer valued Bally’s at $15 per share, representing a significant increase from the previous week’s closing price.
- Oracle: Shares of Oracle added 1.6% ahead of the company’s fiscal third-quarter earnings report.
- Nvidia: The AI computing stock declined 1.2% along with a broader decline in semiconductor stocks.
Materials Stocks Outperform
Market Sector Performance
Materials stocks in the S&P 500 showed strength and outperformed other sectors in the market. The sector added nearly 1% and featured top performers like Albemarle, which saw a jump of more than 5%, and Newmont, with a gain of more than 3.5%. However, some materials names, including Steel Dynamics and Nucor, struggled and saw declines of around 1.3%.
Stock Market Rally to Continue Despite Potential Pullback
Market Outlook
Wolfe Research, a renowned research firm, predicts a potential pullback in the stock market after a massive run. However, the firm suggests that a sustained and meaningful downturn is unlikely unless there are significant negative signals in the incoming data or sticky inflation that prevents the Fed from quick and deep cuts. Certain stocks, including Big Tech names with upward earning revisions, are expected to perform well. Moreover, a broader market breadth is also expected to emerge, with previously underperforming stocks, small caps, and forgotten cyclicals taking the lead.
Boeing Drags on Dow
The Dow slipped in Monday’s session, dragged down by Boeing and a few other underperforming stocks. While the index showed a small decline, less than half of the stocks in the Dow recorded losses. Boeing, Amazon, IBM, Caterpillar, and American Express were the biggest losers in the index, while Nike and UnitedHealth were the top gainers.
Bitcoin Hits New Record, Crypto Stocks Soar
Bitcoin reached a new all-time high, driving significant gains in stocks associated with the cryptocurrency market. Coinbase, the popular crypto exchange, advanced 3.5%, while Microstrategy, a Bitcoin proxy, jumped 9% after announcing a new Bitcoin purchase. However, other crypto stocks, like Marathon Digital and CleanSpark, experienced declines, while Iris Energy and Riot Platforms remained relatively stable. Mining stocks are experiencing some volatility in anticipation of the upcoming Bitcoin halving event.
Industrials Among Worst-Performing Stocks in S&P 500
The industrials sector in the S&P 500 underperformed, contributing to the index’s overall decline. Factors like the ongoing Boeing 737 Max concerns affected the stocks in the sector.
Stocks Open Lower
The market opened lower on Monday, indicating a cautious start to the week.
Artificial Intelligence Stocks Struggle
Some key stocks tied to artificial intelligence experienced a decline in the premarket on Monday. Super Micro Computer, Nvidia, and the Global X Artificial Intelligence & Technology ETF (AIQ) were among the stocks that showed weakness. The pullback comes as investors question the sustainability of the technology sector’s recent bullish run.
Stocks moving premarket
A number of stocks experienced notable premarket moves. The full list of stocks can be found here.
Nvidia Turns in Premarket
Nvidia initially traded in the green during premarket trading, but later turned negative.
Stocks Come Off Losing Week
After a challenging week, which saw a decline in all the major indexes, new trading week begins with cautious market sentiment.
Tech Stocks Drag Nikkei
The Nikkei 225 led losses in Asia, falling over 2% due to the drop in tech stocks. Advantest Corp and Screen Holdings were among the largest decliners in the index.
