Tech Sector Powers S&P 500 To 10-Month High While Oil Stocks Struggle: What's Driving Markets Today

Stocks kicked off the week on a positive note, ahead of key macro events in the upcoming days, including the May inflation rate figure on Tuesday and the Federal Reserve's monetary policy decision on Wednesday.

The S&P 500 Index, closely monitored by the SPDR S&P 500 ETF Trust SPY, reached its August 2022 highs at 4,320 points and is on track to reach 10-month highs by the end of today's session.

While large tech companies continue to drive the overall stock market higher, oil stocks are struggling due to a significant drop in crude oil prices. Investors remain confident that the Fed will keep interest rates unchanged, delivering a pause to the previous 15-month hiking cycle, with a 75% probability priced by the latest CME Group FedWatch tool.

Chart Of The Day: S&P 500 Index Approached August 2022's Highs

Cues From Monday's Trading:

The Nasdaq 100 continues to outperform other major U.S. averages, up 0.8% on the day, reflecting the tech-sector dominance.

The S&P 500 was up 0.4%, while the Dow Jones rose by 0.3%. Small caps were also quite upbeat, with the Russell 2000 Index up 0.8%. 

U.S. Indices’ Performance on Monday

Analyst Color:

LPL Financial chief technical strategist Adam Turnquist weighed in on the recent market rally. The S&P 500's entry into a new bull market suggests the Oct. 12 low can now be labeled as a bear market low, the analyst said.

Turnquist noted that it took 165 trading days for the index to surpass the 20% threshold of the bear market low, marking the second-longest period to confirm a new bull market in nearly 75 years.

The LPL analyst sees more gains ahead. Drawing on historical forward after the commencement of a bull market, he noted that the average and median return 12 months after a bull market officially starts were 18-19%.

Monday's Trading In Major US Equity ETFs: In midday trading on Monday, the SPDR S&P 500 ETF Trust was 0.34% higher to $431.39, the SPDR Dow Jones Industrial Average ETF DIA rose 0.3% to $340.18 and the Invesco QQQ Trust QQQ was 0.78% higher to $357.27, according to Benzinga Pro data.

The Technology Select Sector SPDR Fund XLK rose 1.3%, followed by the Consumer Discretionary Select Sector SPDR Fund XLY, up 1.1%, and the Communication Services Select Sector SPDR Fund XLC, up 0.5%. 

The Energy Select Sector SPDR Fund XLE was the daily worst performer, down 1.1%.

Latest Economic Data:

The Federal Reserve of New York revealed the consumer inflation expectations survey for May, showing that year-ahead expectations fell to 4.1% in May 2023, the lowest since March 2021, down from 4.4% in April.

See also: Best Futures Brokers

Stocks In Focus:

Carnival Corp. CCL rose 14% on the day, after both JPMorgan and Bank of America upgraded the company and raised the price targets. 

Airbnb, Inc. ABNB rose 5%, after France's finance ministry announced that it is working on plans to close a tax loophole benefiting short-term furnished rentals.

Sofi Technologies, Inc. SOFI rose nearly 10% after Truist Securities analysts led by Andrew Jeffrey lifted their price target from $8 to $11. 

Nasdaq, Inc. NDAQ fell 12%, as the company said it would pay $10.5 billion in cash and stock to acquire financial software developer Adenza from Thoma Bravo, making this the largest acquisition for Nasdaq.

• Chinook Therapeutics, Inc. KDNY skyrocketed over 58% after Novartis AG NVS announced a deal to buy the biotech for $40 per share in cash.
• Illumina, Inc. ILMN rose over 3.5% after its CEO Francis de Souza quit following a proxy battle with Carl Icahn over its strategic direction.
• Oracle Corp. ORCL is due to report its quarterly results after the market close. Wolfe Research upgraded the stock from Peer Perform to Outperform with a $130 price target.

Commodities, Bonds, Other Global Equity Markets:

Crude oil plunged 3.9%, with a barrel of WTI-grade crude falling to $67.56. The United States Oil Fund ETF USO was 3.8% lower to $60.6 per share.  

Treasury yields were unchanged in the short and belly part of the curve, with the 10-year yield flat at 3.79% and the two-year yield flat at 4.60%. The 30-year yield rose 5 basis points to 3.93%, pushing the iShares 20+ Year Treasury Bond ETF TLT 0.6% lower for the day. 

The dollar strengthened, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was flat at 1.0750.

European equity indices rose across the board. The SPDR DJ Euro STOXX 50 Etf  FEZ rose 0.9%. 

Gold fell 0.4% to $1,954/oz. The SPDR Gold Trust GLD was 0.3% lower to $181.50. Silver dipped 1.3% to $23.96, with the iShares Silver Trust SLV down 1.2% to $22 per share. Bitcoin BTC/USD fell 0.4% to $25,825.

Staff writer Piero Cingari updated this report midday Monday. 

Read Next: Imminent CPI Report: Pivotal Inflation Showdown Could Halt Fed’s Rate Hikes