The S&P 500 advanced 0.6% on Monday after being down as much as 1.7% earlier in the day. The Nasdaq Composite (+1.3%), Dow Jones Industrial Average (+0.7%), and Russell 2000 (+0.7%) followed similar price action, with the tech-sensitive Nasdaq scoring the performance edge.
Seven of the 11 S&P 500 sectors closed higher after each traded lower during the session. The information technology (+1.4%) and communication services (+1.5%) sectors, which are this month’s worst-performing sectors, outperformed, while the energy sector (-3.3%) was by far the worst performer today.
There wasn’t a specific catalyst that drove the market off session lows, suggesting the market simply bounced from a short-term oversold condition, aided by short-covering activity. The S&P 500 was down 6.9% between last Thursday’s intraday high (4512.94) and today’s intraday low (4200.82).
The downside momentum corresponded with underlying growth concerns, specifically tied to the Fed’s hawkish mindset, China’s zero-tolerance policy for a worsening COVID-19 situation, and Russia’s invasion of Ukraine that has shifted towards a landgrab strategy in eastern Ukraine.
Despite the comeback, growth concerns were still evident in the eight-basis-point decline in the 10-yr yield (2.83%), the 3% decline in oil prices ($98.63/bbl, -3.37, -3.3%), the underperformance of the value/cyclical stocks, and the relative strength of the growth stocks.
The mega-caps, being some of the more beaten-up stocks this month, led the recovery effort in front of their earnings reports this week. The Vanguard Mega Cap Growth ETF ( MGK 214.30, +2.64) rose 1.3% while the Invesco S&P 500 Equal Weight ETF ( RSP 152.85, +0.46) increased just 0.3%.
In corporate news, Twitter ( TWTR 51.70, +2.77, +5.7%) confirmed a definitive agreement to be acquired by an entity wholly owned by Elon Musk for approximately $44 billion, or $54.20 per share, in cash. Coca-Cola ( KO 65.94, +0.69, +1.1%) set an all-time high after beating top and bottom-line estimates.
Separately, the U.S. Dollar Index increased 0.5% to 101.71. The 2-yr Treasury note yield fell nine basis points to 2.63%.
Investors did not receive any economic data on Monday. Looking ahead to Tuesday, investors will receive the Conference Board’s Consumer Confidence Index for April, New Home Sales for March, Durable Goods Orders for March, the FHFA Housing Price Index for February, and the S&P Case-Shiller Home Price Index for February.
- Dow Jones Industrial Average -6.3% YTD
- S&P 500 -9.9% YTD
- Russell 2000 -13.0% YTD
- Nasdaq Composite -16.9% YTD
Overseas:
- Europe: DAX -1.5%, FTSE -1.9%, CAC -2.0%
- Asia: Nikkei -1.9%, Hang Seng -3.7%, Shanghai -5.1%
Commodities:
- Crude Oil -3.37 @ 98.63
- Nat Gas +0.15 @ 6.65
- Gold -37.30 @ 1896.30
- Silver -0.59 @ 23.67
- Copper -0.12 @ 4.44