In the first trading session of the new week, all three main US stock indices traded lower as investors were cautious ahead of a busy week of tech earnings and economic data.
Microsoft Corp. MSFT, Meta Platforms, Inc. META, Alphabet, Inc. GOOGL GOOG, and Amazon, Inc. AMZN are among the heawyweight tech firms scheduled to report in the coming days.
The next key economic data releases are durable goods orders and new home sales on Wednesday, the estimate for Q1 GDP growth rate on Thursday, personal income and spending, and the PCE price index on Friday.
Cues From Monday's Trading:
The major averages were slipping again on Monday, with a tech-growth underperformance highlighting the mood.
The S&P 500 index eased 0.3%, while the Dow Jones Industrial Average was 0.2% lower. Tech stocks in the Nasdaq 100 fell 0.7%, while small caps in the Russell 2000 fell 0.5%.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq 100 | -0.70% | 12,894.71 | |
| S&P 500 Index | -0.3% | 4,120.90 | |
| Dow Industrials | -0.2% | 33,784.85 |
Analyst Color:
The S&P 500 Index could retest its October lows this year, given the weakening economic data, decreased bank lending and the Federal Reserve’s "higher-for-longer rate" signal, which will likely work in unison to cause the index to price in a mild-recession scenario, said John Lynch, chief investment officer at Comerica Wealth Management.
The analyst noted that the recent run has left the S&P 500 Index at the top-end of the trading range following its emergence from the October low.
“We believe the combination of declining earnings, weakening economic growth, a steadfast Federal Reserve, and a lack of broad participation suggests the equity market is poised to struggle in the weeks and months ahead,” Lynch said.
“Considering full employment and solid cash levels, we suspect the equity market, as a discounting mechanism will begin to price in a 2024 recovery in the second half of this year.”
Comerica’s 2023 year-end price target for the S&P 500 Index is 4,100-4,200.
Monday's Trading In Major US Equity ETFs:
In midday trading on Monday, the SPDR S&P 500 ETF Trust SPY was 0.3% lower to $411, the SPDR Dow Jones Industrial Average ETF DIA weakened by 0.15% to $337.60 and the Invesco QQQ Trust QQQ was 0.8% lower to $314, according to Benzinga Pro data.
Among U.S. equity sectors, the Technology Select Sector SPDR Fund XLK underperformed, down 1.1%, followed by the Consumer Discretionary Select Sector SPDR Fund XLY, down by 0.8%, and the Real Estate Select Sector SPDR Fund XLRE outperformed, down by 0.7%.
The Energy Select Sector SPDR Fund XLE outperformed, up by 1.3%, followed by traditional defensive sectors such as the Utilities Select Sector SPDR Fund XLU and the Health Care Select Sector SPDR Fund XLV, both up by 0.4%.
Latest Economic Data:
The Chicago Fed National Activity Index remained unchanged at -0.19 in March 2023, falling short of expectations of negative 0.02.
The Federal Reserve Bank of Dallas’ general business activity index for manufacturing in Texas dropped from -15.7 in March to -23.4 in April 2023, posting its lowest reading in nine months and below market expectations of -14.6.
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Stocks In Focus:
- Bed Bath & Beyond, Inc. BBBY shares plunged nearly 30% after the retailer filed for bankruptcy protection.
- Coca-Cola Company KO marginally rose after the company reported better-than-expected results in Q1.
- c3.ai, Inc. AI fell over 10%, potentially reacting to a downgrade by Wolf Research from Peer Perform to Underperform with a $14 price target.
- Medtronic plc. MDT rose over 4% after Barclays upgraded the stock from Equalweight to Overweight, raising the price target.
- Ameriprise Financial, Inc. AMP, Canadian National Railway Company CNI, Cleaveland-Cliffs, Inc. CLF, First Republic Bank FRC, Tenable Holdings, Inc. TENB and Whirlpool Corp. WHR are among the companies reporting after the market close.
Commodities, Bonds, Forex And Other Global Equity Markets:
Crude oil rose 1%, with a barrel of WTI-grade crude surging to $78.61. The United States Oil Fund ETF USO was 1.5% higher to $69.24 per share.
Treasury yields dropped, with the 10-year yield falling by 6 basis points to 3.52% and the two-year yield down 4 basis points to 4.15%. The iShares 20+ Year Treasury Bond ETF TLT was 0.8% higher on the day.
The dollar was weaker, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, rose 0.4% to 1.1026.
European equity indices fell across the board. The iShares MSCI Eurozone ETF EZU rose 0.1%, given the currency effect.
Gold was broadly flat at $1,985/oz. The SPDR Gold Trust GLD was 0.1% higher to $184.49. Silver rose 0.3% to $25.15, with the iShares Silver Trust SLV trading 0.5% higher to $23.11 per share. Bitcoin BTC/USD fell 1% to $27,306.
Staff writer Piero Cingari updated this report midday Monday.
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