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05/03/24 Briefing

Wall Street closed lower on Monday as market participants remained concerned about the trajectory of interest rate movement. Investors are waiting for Fed Chairman’s Congressional testimony this week. Moreover, markets wait for key jobs data of February this week. All three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) was down 0.3% to close at 38,989.83. Notably, 16 components of the 30-stock index ended in positive territory and 14 ended in negative zone. The blue-chip index is currently 0.9% below its all-time high recorded on Feb 23.

The tech-heavy Nasdaq Composite finished at 16,207.51, declining 0.4% due to weak performance by technology bigwigs. The tech-laden index has fell from its all-time high in 2024 while remaining in bull market with its peers.

The S&P 500 fell 0.1% to finish at 5,130.95. Wall Street’s benchmark retreated from its all-time high recorded on Mar 1. Six out of 11 broad sectors of the broad-market index ended in positive territory while five in negative zone.The Utilities Select Sector SPDR (XLU) and the Real Estate Select Sector SPDR (XLRE) increased 1.7% and 1.1%, respectively. On the other hand, the Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Energy Select Sector SPDR (XLE) decreased 1.3%, 1.4% and 1.1%, respectively.The fear-gauge CBOE Volatility Index (VIX) was up 2.9% to 13.49. A total of 12.69 billion shares were traded on Monday, higher than the last 20-session average of 11.87 billion. Decliners outnumbered advancers on the NYSE by a 1.20-to-1 ratio. On Nasdaq, a 1.44-to-1 ratio favored declining issues.

Mixed Bag on M&A Front

Shares of Macy's Inc. M soared 13.6% after a real estate-focused investment firm Arkhouse Management said that the company together with Brigade Capital Management have raised their bid to acquire the department store chain.The new offer price is $24 per share, an increase of 14% from the previous offer price of $21 per share. The new offer price will value Macy’s more than $6.6 billion. The company said that its board will review and evaluate the new proposal. Following the news, the stock price of Macy’s soared 13.6%.JetBlue Airways Corp. JBLU and Spirit Airlines Inc. SAVE have decided to terminate their proposed $3.8 billion merger plan after losing a federal antitrust lawsuit challenging the deal. Notably, the deal was aimed to better compete with the larger airlines that control most of the U.S. market.However, in his ruling, Judge William Young said that the proposed merger would “harm cost-conscious travelers who rely on Spirit’s low fares.” Spirit shareholders received $425 million in prepayments from JetBlue during the agreement, and that JetBlue will pay Spirit $69 million related to the agreement’s termination.Following the termination of the M&A proposal stock price of JetBlue surged 4.3% while stock price of Spirit Airlines plunged 10.8%. Currently, Macy’s, JetBlue and Spirit carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Powell’s Testimony

The Fed Chairman Jerome Powell will deliver monetary policy updates in his testimony before the House of Representatives on Mar 6 and before the Senate on Mar 7. Market participants will keenly watch his statement in order to derive any clue regarding the movement of the benchmark interest rate in near future. The Fed has already categorically denied any possibility of a rate cut in its upcoming March FOMC meeting.

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