The S&P 500 declined 0.4% on Monday amid some slippage in the last 45 minutes of action, which erased a 0.5% gain for the benchmark index. The Nasdaq Composite fell 0.6% after being up 1.0% intraday. The Dow Jones Industrial Average (unch) closed flat, while the Russell 2000 outperformed with a 0.5% gain.
For most of the day, there wasn’t a lot of trading conviction as the major indices, and most S&P 500 sectors, wavered between gains and losses. Investors continued to contemplate whether the market bottomed on Jan. 24 in the face of rising rates and the Fed’s tightening plans.
Trading conviction was reserved for the energy (+1.3%) and communication services (-2.3%) sectors, which diverged in opposite directions, as well as individual story stocks.
Energy stocks outperformed as oil prices stayed above $90 per barrel ($91.27, -1.03, -1.1%), although WTI crude futures did settle on a lower note today. The communication services sector was dragged lower by weakness in Alphabet (GOOG 2778.76, -81.56, -2.9%) and Meta Platforms (FB 224.91, -12.18, -5.1%).
Generally, there was a preference for value/cyclical stocks over the growth stocks. The Invesco S&P 500 Equal Weight ETF (RSP 155.83, +0.10) increased 0.1% – as did the Russell 3000 Value Index (+0.1%) – while the Vanguard Mega Cap Growth ETF (MGK 233.18, -2.08) fell 0.9%.
One of today’s bigger stories was the airline merger between Spirit (SAVE 25.46, +3.73, +17.2%) and Frontier (ULCC 12.82, +0.43, +3.5%), valued at $6.6 billion in cash and stock, including net debt and operating leases. On a related note, both companies reported better-than-expected EPS results.
On Semiconductor (ON 62.26, +4.84, +8.4%) and Tyson Foods (TSN 99.09, +10.80, +12.2%) also exceeded earnings expectations while Peloton (PTON 29.75, +5.15, +20.9%) jumped 21% on reports indicating that Amazon.com (AMZN 3158.71, +5.92, +0.2%) and Nike (NKE 145.14, -0.25, -0.2%) are interested in acquiring the company.
U.S. Treasury yields settled slightly lower amid a warning from National Security Adviser Jake Sullivan that Russia could invade Ukraine “any day now.” The 2-yr yield declined three basis points to 1.29%, and the 10-yr yield declined one basis point to 1.92%. The U.S. Dollar Index declined 0.1% to 95.42.
Reviewing Monday’s economic data:
- Consumer credit increased by $18.9 billion in December (Briefing.com consensus $25.0 billion). The prior month saw a downward revision to $38.9 bln from $39.9 bln.
- The key takeaway from the report is that the increase in consumer credit in December was driven mostly by an expansion in nonrevolving credit.
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Looking ahead, investors will receive the Trade Balance report for December on Tuesday.
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Dow Jones Industrial Average -3.4% YTD
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S&P 500 -5.9% YTD
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Nasdaq Composite -10.4% YTD
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Russell 2000 -10.4% YTD
Overseas:
- Europe: DAX +0.7%, FTSE +0.8%, CAC +0.8%
- Asia: Nikkei -0.7%, Hang Seng +0.0%, Shanghai +2.0%
Commodities:
- Crude Oil -0.97 @ 91.37
- Nat Gas -0.26 @ 4.25
- Gold +15.40 @ 1822.00
- Silver +0.61 @ 23.07
- Copper -0.01 @ 4.48