Wall Street stocks rebounded on Monday, reversing losses from previous sessions, as investors braced for a flurry of corporate earnings reports that promise insights into the U.S. economy’s trajectory.
The S&P 500 and Nasdaq, which had declined over the past six sessions amid concerns over interest rate cuts, geopolitical tensions, and persistent inflation, saw a turnaround. All 11 S&P 500 sectors closed in the green, with technology and financial stocks leading the gains.
Major companies, including the tech giants often referred to as the “Magnificent Seven” – Tesla, Meta Platforms, Alphabet, and Microsoft – are set to release their quarterly results this week. This lineup has heightened anticipation among investors.
Lamar Villere, portfolio manager at Villere & Co in New Orleans, remarked, “I think it’s just standard buy-on-the-dip after a 5% pullback that kind of wakes people up to put money to work. Investors are looking ahead to this week with hugely significant earnings coming out and with concerns about what the Fed is doing with pushing back any rate cuts.”
According to LSEG data, money markets are now pricing in only about 41 basis points (bps) of rate cuts for this year, a sharp decline from the 150 bps forecast at the beginning of the year.
Adding to the mix, markets are eagerly awaiting the release of the March personal consumption expenditure (PCE) data later this week. The PCE data is the Federal Reserve’s preferred measure of inflation and will be closely watched to gauge the central bank’s future monetary policy stance. Currently, Fed policymakers are observing a media blackout period ahead of their policy meeting on May 1.
The S&P 500 closed up 43.37 points, or 0.87%, at 5,010.60, while the Nasdaq Composite gained 169.30 points, or 1.11%, ending at 15,451.31. The Dow Jones Industrial Average rose by 253.58 points, or 0.67%, reaching 38,239.98.
Among the megacap growth stocks, Alphabet, Amazon.com, and Apple saw gains ranging between 0.5% and 1.5%. Tesla, however, bucked the trend, dropping 3.4% after announcing price cuts in major markets, including China and Germany.
Cardinal Health shares fell by 5% following news that its contracts with UnitedHealth Group’s OptumRx would not be renewed upon expiration at the end of June.
Advancing issues outpaced decliners by a ratio of 2.87-to-1 on the NYSE, with 49 new highs and 76 new lows. On the Nasdaq, advancing stocks outnumbered decliners by 1.79-to-1, with the S&P 500 and Nasdaq both posting new highs and lows.
Volume on U.S. exchanges stood at 10.33 billion shares, slightly below the 11.03 billion average over the last 20 days.
Thomas Hayes, chairman of hedge fund Great Hill Capital in New York, summed up the sentiment, “This is predicated on positive technical expectations on tech earnings and traders not wanting to be short in front of it, and the PCE numbers later this week that people are somewhat sanguine about as well.”