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08/01/24 Briefing

The Nasdaq scored its first gain of at least 1% in 2024 on Monday, as a fall in Treasury yields helped lift megacap stocks, while a sharp drop in Boeing shares kept gains on the Dow Industrials in check.

Megacaps advanced, lifting stocks such as (AMZN.O) which closed up 2.66% and Alphabet (GOOGL.O), which rose 2.29%, as Treasury yields fell ahead of readings on inflation and a new supply of government debt this week, with the benchmark 10-year U.S. Treasury yield hitting a low of 3.966% on the session.

In addition, Apple (AAPL.O) climbed 2.42% after the iPhone maker said its Vision Pro mixed-reality device will be available for sale from Feb. 2 in the United States.

Nvidia (NVDA.O) surged 6.3% and fellow chipmaker Advanced Micro Devices (AMD.O) jumped 5.48%, helping to push the Philadelphia SE Semiconductor Index (.SOX) up 3.28% as it bounced from a 5.8% drop last week, its biggest weekly percentage fall since October 2022.

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"This is definitely a yield-driven market for now and investors are trying to discount when and how many rate cuts we will see, the timing and the magnitude of rate cuts," said Bill Merz, head of capital markets research at U.S. Bank Wealth Management in Minneapolis.

"Now we're probably in a more rational place in terms of yields and it's a question of, is the market getting that right and are yields falling for the right reasons or the wrong reasons? And investors have so far taken the view that yields are falling for all the right reasons, that the Fed is navigating what thus far has been a soft landing."

The Dow Jones Industrial Average (.DJI) rose 216.90 points, or 0.58%, to 37,683.01, the S&P 500 (.SPX) gained 66.30 points, or 1.41 %, to 4,763.54 and the Nasdaq Composite (.IXIC) gained 319.70 points, or 2.20%, to 14,843.77.

The gains on the Nasdaq and S&P 500 marked their first daily percentage climbs of more than 1% since Dec. 21 and biggest one-day percentage advances since Nov. 14.

[1/2]People walk around the New York Stock Exchange in New York, U.S., December 29, 2023. REUTERS/Eduardo Munoz/File Photo Acquire Licensing Rights

Meanwhile, Boeing (BA.N) shares plunged 8.03% after the plane maker and U.S. regulators gave the go-ahead on Monday for airlines to inspect jets that were grounded after a panel blew off an Alaska Airlines-operated (ALK.N) 737 MAX 9 in mid-flight which forced a dramatic landing of the airliner over the weekend.

The S&P 500 energy index (.SPNY) was the sole decliner among the 11 S&P 500 sectors, falling 1.16% after hitting its lowest level in a month as crude prices sank about 4% after sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output.

On Friday, the benchmark S&P 500 (.SPX) snapped a nine-week streak of gains, as investors dialed back expectations on the possible aggressiveness of the Federal Reserve in cutting interest rates this year following a mixed bag of economic data on the labor market and services sector.

Atlanta Fed President Raphael Bostic said on Monday that the central bank's dual goals of lowering inflation and maintaining low unemployment are not yet in conflict.

Money markets now see a 63.8% chance of at least a 25 basis-point (bps) rate cut as soon as March, according to CME's FedWatch Tool, down from 88.5% a week ago.

Investors will eye inflation data this week in the form of the consumer price index (CPI) and producer price index (PPI) to shape expectations for the path of interest rates by the Fed.

Advancing issues outnumbered decliners by a 3-to-1 ratio on the NYSE while on the Nasdaq, advancing issues outnumbered decliners by a 2.3-to-1 ratio.

The S&P 500 posted 13 new 52-week highs and no new lows while the Nasdaq recorded 101 new highs and 92 new lows.

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