US Stocks Surge, Chipmakers Rally Despite China's Woes: What's Driving Markets Monday?

U.S. stocks kicked off the week positively as the S&P 500 Index aims to break a four-day losing streak. Despite the negative sentiment from China due to liquidity issues involving Zhongzhi Enterprise Group Co., a Chinese private wealth management firm, investors responded favorably by purchasing sectors that had experienced declines in recent weeks, particularly in the tech and semiconductor industries.

Shares of NVIDIA Corp. NVDA surged by over 5% on Monday, putting them on track for their strongest session since the end of May 2023. Rival Advanced Micro Devices Inc. AMD rose 2.4%, while Marvell Technology Inc. MRVL gained nearly 4%. The VanEck Semiconductors ETF SMH rose 2%, on track for the best daily performance in a month.

Bond yields continued to move higher, with the 10-year yield briefly reaching 4.2%, the highest level since November 2022. Key economic events for the week include retail sales data scheduled for Tuesday and the release of the Federal Reserve’s minutes from the July FOMC meeting on Wednesday. Notable retail earnings reports for the week are expected from Walmart, Inc. WMT, Target Corp. TGT and Home Depot HD.

Cues From Monday’s Trading:

The S&P 500 Index rose 0.4%, while blue-chip companies in the Dow Jones took a breather and hold steady for the day.

The Nasdaq 100 index outperformed, up 0.8%, while small caps eased 0.4%

US Stock Index Performance On Monday

Analyst Color:

The August market weakness should not unduly worry traders, said fund manager Louis Navellier in a recent note. The S&P 500 Index was down 2.7% for the month and the Nasdaq Composite was down a steeper 4.7%. The fund manager termed this as a relatively modest correction. He also noted that recession fears continue to ease.

“While stocks have been soft so far in August it is also a seasonally weak month, as is September, and with the first seven months of the year setting records, investors shouldn’t be too discouraged,” he said.

Monday’s Trading In Major US Equity ETFs: In midday trading on Monday, the SPDR S&P 500 ETF Trust SPY was 0.3% higher to $447, the SPDR Dow Jones Industrial Average ETF DIA held steady at $368, while and the Invesco QQQ Trust QQQ was 0.8% higher to $369, according to Benzinga Pro data.

U.S. equity sectors’ performance was mixed. Big gains were visible in the the Technology Select Sector SPDR Fund XLK, up 1.1%, followed by the Communication Services Select Sector SPDR Fund XLC, up 0.4%.

The laggards were the the Utilities Select Sector SPDR Fund XLU, down 0.9%, and the Real Estate Select Sector SPDR Fund XLRE, down 0.4%.

Upcoming Economic Data:

The unfolding week's calendar has some key first-tier data that has the potential to move markets.

The spotlight will likely be on the FOMC minutes, the July retail sales report, the results of two regional manufacturing activity surveys for August, the July industrial production data, the July housing starts data and the Conference Board's leading economic index for July. Traders may also keep an eye on the routinely released weekly jobless claims data.

See also: How To Trade Futures

Stocks In Focus:

• AMC Entertainment Holdings, Inc. AMC shares plunged over 34% to $3.44 while its preferred unit APE climbed 27.53% to $2.27 after a court gave the nod for increasing authorized capital and the conversion of APE units into AMC common stock.
• United States Steel Corp. X jumped over 30% after the company confirmed a $35 per share cash and stock offer from peer Cleveland-Cliffs, Inc. CLF. US Steel rejected the offer but asked its rival to take part in a formal strategic review process. Cleveland-Cliffs rose over 7%. Steel Dynamics Inc. STLD rose 6% in sympathy.
• Tesla, Inc. TSLA fell over 2% after the company announced sharp cuts in China.
• EV maker Nikola Corp. NKLA fell nearly 10% after the company recalled 209 Class 8 Tre battery-electric vehicles as a precautionary measure. 
• Notable companies reporting after the close include Alcon, Inc. ALC and Navitas Semiconductor Corp. NVTC,

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.8%, with a barrel of WTI-grade crude trading at $82. The United States Oil Fund ETF USO was 0.9% lower to $73.  

Treasury yields were broadly steady, with the 10-year yield flat at 4.16% and the two-year yield up by 4 basis points to 4.94%. The iShares 20+ Year Treasury Bond ETF TLT was 0.5% higher for the day. 

The dollar fell, 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 0.1% lower to 1.0925.

European equity indexes closed in a mixed fashion. The SPDR DJ Euro STOXX 50 Etf  FEZ fell 0.3%. 

Gold was steady at $1,911/oz. The SPDR Gold Trust GLD was 0.1% lower to $177. Silver fell 0.1% to $20.78, with the iShares Silver Trust SLV down 0.1% to $20.8. Bitcoin BTC/USD rose 1.2% to $29,619.

Staff writer Piero Cingari updated this report midday Monday. 

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