Stocks Claw Back from Early Losses to Finish Higher…..
U.S. equities were able to dig out of an early-morning hole with the Communications Services sector leading the way in the wake of the announcement that Twitter accepted Elon Musk’s buyout offer, as well as strength in Information Technology shares ahead of a slew of earnings from tech heavyweights slated for this week. However, the markets continued to grapple with the expected Fed aggressiveness, the persisting war in Ukraine, inflation pressures, and further COVID-related lockdowns in China. Earnings released today showed Dow member Coca-Cola Company topped quarterly expectations and Activision Blizzard reported Q1 profits that missed estimates. In economic news, Dallas manufacturing growth slowed more than expected to kick off a robust docket this week. Treasuries rose to apply significant pressure on yields, and the U.S. dollar continued to rally, while crude oil prices and gold were under solid pressure. Stocks in Europe were lower to start the week, while markets in Asia also fell as the China lockdowns weighed on sentiment.
The Dow Jones Industrial Average rose 238 points (0.7%) to 34,049, the S&P 500 Index increased 24 points (0.6%) to 4,296, and the Nasdaq Composite gained 166 points (1.3%) to 13,005. In moderate volume, 5.1 billion shares of NYSE-listed stocks were traded, and 4.7 billion shares changed hands on the Nasdaq. WTI crude oil shed $3.53 to $98.54 per barrel. Elsewhere, the gold spot price traded $34.30 lower to $1,900.00 per ounce, and the Dollar Index was 0.5% higher at 101.71.
Treasuries were higher to trim a recent drop that has seen rates jump as the markets continue to be uneasy amid a host of potential headwinds. Chief among them is aggressive monetary policy tightening expectations that have fostered the rise in yields, along with recent inflation data and comments from Fed officials. Fed Chairman Jerome Powell last week said a rate hike of 50 basis points (bps) was on the table for its May 4 monetary policy decision, which would be the first time it raised rates in excess of 25 bps in over 20 years. Meanwhile Fed officials have suggested that the beginning of its balance sheet reduction program was also set to start soon, with a ramp-up to $95 billion in securities to “mature off” the balance sheet each month.
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