Stocks Advance, Dollar And Oil Retreat, While Bitcoin Skyrockets: What's Driving Markets Monday?

Wall Street started the week on a positive note, as all major U.S. indices and every sector within the S&P 500 showed gains during the morning session, alleviating the concerns that arose on Friday.

Traders deduced from the better-than-expected Q3 earnings reports of major U.S. banks, that the economy is still robust, thus anticipating further positive results coming from other key quarterly reports this week, including Tesla, Inc. TSLA, Netflix, Inc. NFLX, Procter & Gamble Co. PG and Johnson & Johnson JNJ.

The U.S. dollar weakened, as traders await Powell’s comments this week, which might hint at the direction of Fed tightening during the FOMC meeting in two weeks. Oil prices moved slightly lower.

Bitcoin BTC/USD rallied 3.8% to $28,205 driven by speculation surrounding the potential approval of the first-ever Bitcoin ETF, after the SEC passed the deadline for appealing Grayscale’s attempt to convert its GBTC fund into a spot bitcoin ETF.

Meanwhile, the situation in the Middle East remains complex, with the ongoing evacuation in Northern Gaza and continued rocket exchanges between Israel and Hamas. Additionally, President Joe Biden is considering a visit to Israel, while U.S. Secretary of State Antony Blinken has extended his stay by another day.

Cues From Monday's Trading:

The S&P 500 Index rose 1%, with similar gains witnessed for the Dow Jones Industrial Average and the Nasdaq 100. Small caps in the Russell 2000 outperformed, rising 1.6%.

US Index Performance On Monday

Analyst Color:

“The S&P 500 has wrapped up the first year of the bull market with a gain of 21.6%, underwhelming from a historical context but respectable given the challenging macro backdrop over the last 12 months,” said LPL Financial Chief Technical Strategist Adam Turnquist.

The analyst expects some of the headwinds to recede as the bull market progresses into its second year. The likelihood of the Federal Reserve ending its rate-hiking cycle amid a cooling-off of inflationary pressure will likely take some upside pressure off interest rates. This, in turn, could prove positive for stocks, he said.

“History also suggests this bull market may have more room to run. Average and median 12-month returns for the S&P 500 have averaged around 13% to 14% during the second year of a bull market,” he said.

Chart Courtesy of LPL Financial

Stocks In Focus:

• Apple, Inc. AAPL fell 0.8% after China reported disappointing iPhone 15 sales.
• Charles Schwab Corp. SCHW rallied 5.2% after reporting its quarterly results.
• Marathon Digital Holdings, Inc. MARA experienced a 6.2% increase in response to a surge in the cryptocurrency market, driven by increasing speculation that the Securities and Exchange Commission is nearing approval for the first-ever spot bitcoin ETF.
• Pfizer Inc. PFE rose 5% after Jefferies upgraded the company from Hold to Buy, and raised its price target from $38 to $39.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.6%, with a barrel of WTI-grade crude trading at $86. The United States Oil Fund ETF USO was 0.5% lower to $78.60.  

Treasury yields rose, with the 10-year yield up by 10 basis points to 4.71% and the 30-year yield up by 11 basis points to 4.87%. The iShares 20+ Year Treasury Bond ETF TLT was 1.8% lower 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, down 0.5%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.5% higher to 1.0551.

European equity indices had a positive session. The SPDR DJ Euro STOXX 50 ETF  FEZ rose 1%. 

Gold edged 0.6% up to $1,921/oz, while silver fell 0.3% to $24.14.

Staff writer Piero Cingari updated this report midday Monday. 

Photo: Shutterstock