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The Nasdaq Composite booked its best day in more than a week on Monday, after investors snapped up technology and communications shares on Elon Musk’s disclosure of a large stake in social media platform Twitter Inc.
The Nasdaq, Dow industrials and S&P 500 all rose for a second straight trading day.
- The Nasdaq Composite COMP, +1.90% finished up 271.05 points, or 1.9%, at 14,532.55. That’s the largest daily percentage gain since March 24, 2022, according to Dow Jones Market Data.
- The Dow Jones Industrial Average DJIA, +0.30% added 103.61 points or 0.3%, closing at 34,921.88.
- The S&P 500 SPX, +0.81% closed up 36.78 points, or 0.8%, at 4,582.64.
What drove the market
All three major U.S. stock indexes closed higher on Monday, with investors piling into shares of technology and communications companies after Elon Musk disclosed a large stake in social media platform Twitter Inc.
The S&P 500’s information technology sector finished up by 1.9%, while the communications-services component closed 2.3% higher and the consumer-discretionary sector advanced 2.3%, according to FactSet. Shares of Meta Platforms, formerly Facebook, FB, +4.02% finished 4% higher, while those of Google parent GOOG, +2.09% Alphabet Inc. closed up by 2.1% and Netflix Inc. NFLX, +4.83% stock jumped 4.8%.
“Technology is primarily up because of Musk buying shares of Twitter,” said Kent Engelke, chief economic strategist at Capitol Securities Management, by phone. “But we’ve also talked about the lack of liquidity in markets right now, whether it’s equities or Treasurys.”
Engelke expects the next big catalyst for stocks to come in about a week with the kickoff of quarterly earnings in earnest by big banks and investors looking for more clarity on the impact of hot inflation on margins.
The Federal Reserve also remains a key focus, with minutes from the central bank’s March policy meeting due on Wednesday. The minutes will be parsed for clues to policy makers’ plans for future moves — in particular, the anticipated reduction of the Fed’s nearly $9 trillion balance sheet — after a quarter-point rate hike was delivered last month.
Investors, economists and analysts continue to debate the implications of moves along the Treasury yield curve. The yield on the 2-year Treasury note traded above the 10-year rate again on Monday — inverting that closely watched measure of the curve, which has served as a reliable recession indicator, albeit with median lag of around a year-and-a-half. Inversions are also occurring in other, less-followed parts of the curve.
“This is a tricky environment for equities. The bond market is saying the risk of an ‘accident’ is very high as rising rates could break a financial system that’s swimming in leverage, but on the other hand, the economy is booming and real yields are still negative,” wrote Marios Hadjikyriacos, senior investment analyst at XM, in a note.
That leaves equity investors with little choice but to “hold on,” the analyst said.
“With bonds selling off and commodities at the mercy of geopolitics, there just aren’t many attractive investment opportunities outside of the stock market. That sets the stage for some choppy trading, until it becomes clearer whether a recession is really on the cards,” he said.
Oil prices CL00, +4.45% settled higher, with U.S. prices back above the $100 mark. They bounced back after a sharp drop last week, sparked partly by a U.S. announcement of an unprecedented release of strategic reserves to fight rising energy costs.
Companies in focus
- In corporate news, shares of Twitter TWTR finished 27% higher after a regulatory filing showed that Tesla Inc. TSLA boss and world’s richest man Elon Musk had acquired a 9.2% stake in the social-media platform.
- Starbucks Corp. SBUX, -3.72% said on Monday that it would suspend its stock-repurchase program, effectively immediately, as Howard Schultz returns to the company as chief executive. Shares closed down by 3.7%.
What other assets were doing
- The yield on the 10-year Treasury note TMUBMUSD10Y, 2.406% rose 3.5 basis points to 2.409%. Yields and debt prices move opposite each other.
- The ICE U.S. Dollar Index DXY, +0.35%, a measure of the currency against a basket of six major rivals, was up 0.4%.
- Bitcoin BTCUSD, -0.14% fell 1.1% to trade near $45,897.
- Gold futures GC00, +0.68% ended higher, with the June gold contract GCM22, +0.68% rising $10.30, or 0.5%, to settle at $1,934 an ounce.
- The Stoxx Europe 600 SXXP, +0.84% closed up by 0.8%, while London’s FTSE 100 UKX, +0.28% advanced 0.3%.
- The Hang Seng Index HSI, +2.10% finished 2.1% higher in Hong Kong, while Japan’s Nikkei 225 NIK, +0.25% edged up 0.3%.
— Joy Wiltermuth contributed to this article.
Source: This post first appeared on http://marketwatch.com/