The major stock indexes were mixed on Monday, with the tech-heavy Nasdaq Composite closing sharply higher while the Dow Jones Industrial Average lagged. Investors are looking ahead to key inflation data and big bank earnings reports later this week.
Nasdaq Leads Market Rally as Tech Stocks Recover
The Nasdaq jumped 2.01% to 10,412.06 on Monday, lifted by a rebound in large-cap technology and growth stocks. Apple surged 2.4% while Microsoft climbed 1.2%. Nvidia was one of the top performers, vaulting 7.5% higher.
The S&P 500 also closed higher, rising 0.7% to 3,719.89. Nine of the 11 major S&P 500 sectors finished in positive territory, with technology and consumer discretionary stocks leading gains. However, the 30-stock Dow fell 112.96 points, or 0.3%, to close at 33,517.65.
“Tech stocks got crushed last week amid concerns over valuations and recession fears, but the sector found its footing Monday as dip buyers jumped in,” said Chris Larkin, managing director of trading at E*Trade Financial.
The market is coming off its worst opening week of the year ever. Surging bond yields and recession worries drove a broad sell-off, with the Nasdaq falling 4.4% last week in its biggest weekly loss since December.
The recent tech rebound is being driven in part by falling Treasury yields. The 10-year yield dropped back near 3.5% on Monday after hitting an 11-year high last week. Lower yields help support valuations, especially for high-growth tech names.
Boeing Plunges as More 737 Max Jets Grounded
While tech and growth stocks rallied, shares of aerospace giant Boeing tumbled 6.5%, making it the worst-performing Dow component.
The sell-off came after Boeing instructed airlines to ground some 737 Max jets to address a potential electrical issue. This marks the latest setback for Boeing’s top-selling jetliner after it was grounded for nearly two years following fatal crashes.
Airline stocks were also under pressure amid the Boeing news. Shares of Delta, United Airlines and American Airlines all traded sharply lower. Meanwhile, Boeing’s production issues are having ripple effects across supply chains. Spirit AeroSystems, which makes fuselages for the Max, saw its stock plunge nearly 10% Monday.
“Boeing remains embattled with problems for its 737 Max,” said George Ball, chairman of Sanders Morris Harris. “This continues to be an overhang on aerospace sector generally and airlines using these planes.”
Going forward, Boeing still faces risks surrounding additional regulatory scrutiny of the 737 Max as well as waning travel demand should an economic downturn take hold. Nonetheless, some analysts see Monday’s dip as a buying opportunity given Boeing’s duopoly position in the global aircraft market alongside Airbus.
| Company | Closing Price | Change |
|---|---|---|
| Boeing Co | 281.00 | -6.5% |
| Delta Air Lines Inc | 32.76 | -3.8% |
| United Airlines Holdings Inc | 39.70 | -2.5% |
| American Airlines Group Inc | 14.05 | -1.5% |
Markets Eye Inflation Data, Bank Earnings
It was overall a rocky start to 2024 for Wall Street amid concerns over the path of Federal Reserve policy. The central bank remains determined to keep interest rates elevated until inflation shows more definitive signs of cooling.
Investor focus is turning to the latest Consumer Price Index (CPI) reading due Thursday. Economists expect to see December inflation moderate but remain stubbornly high at around 6.5% year-over-year. An upside surprise could put more pressure on stocks by bolstering the case for higher rates.
Earnings season also kicks off this week with big banks leading the way. Results from JPMorgan Chase, Citigroup, Wells Fargo and Bank of America are all on tap. The reports could offer clues on the health of consumers and corporations as higher borrowing costs take their toll.
On the data front, November wholesale inflation figures out Friday indicated prices are trending down but still historically high. Consumer sentiment numbers also beat estimates last week but remain depressed.
“Markets face worries that stickier inflation will keep rates higher for longer which could lead to recession,” said David Carter, chief investment officer at Lenox Wealth Advisors. “Equities will remain volatile during this digestion period of slowing growth and slowing inflation.”
Going forward, trading is likely to stay choppy in the near-term. However, any signs of faster disinflation combined with resilience in economic data and corporate profits would be bullish signals for stocks. Most strategists are cautiously optimistic 2024 will bring stock market gains, although more modest than recent years.
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