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Market Snapshot: S&P 500 pops into positive territory as investors shake off weak China data to buy energy, tech stocks

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U.S. stock benchmarks trimmed early losses to trade slightly higher near midday Monday, with buying in energy and information technology helping to buttress the broader market, despite a report that revealed slower-than-forecast growth in China, dulling investor optimism.

How are stock benchmarks trading?
  • The Dow Jones Industrial Average
    DJIA,
    +0.01%

    slipped 39 points, or 0.1%, to 35,255, off an intraday low at 35,035.94, FactSet data show.
  • The S&P 500
    SPX,
    +0.24%

    rose 6 points, or 0.2%, to reach 4,478, after slipping to a Monday low at 4,447.47.
  • The Nasdaq Composite Index
    COMP,
    +0.46%

    gained 52 points, or 0.4%, to 14,949.

On Friday, after the release of stronger-than-forecast retail sales figures, the Dow Jones Industrial Average rose 382 points, or 1.1%, to 35,295, the S&P 500 increased 33 points, or 0.8%, to 4,471, and the Nasdaq Composite gained 74 points, or 0.5%, to 14,897.

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What’s driving the market?

Buying in energy
XLE,
+0.90%

and tech shares
XLK,
+0.37%

gave the broader market a bit of a boost, as investors attempted to shake off an earlier dour mood on Wall Street that had been partly prompted by concerns about the economic health of the world’s second-largest economy as energy prices surge.

China reported 4.9% year-over-year growth in the third quarter, a big slowdown from the 7.9% recorded in the second quarter, as construction output slowed.

Hand-wringing about stuttering global growth and surging inflation, as crude-oil futures surge to their highest levels in year, has helped to check the bulls somewhat. Concerns about inflation also were on display across the pond, before trickling over into U.S. markets.

U.K. bond yields
TMBMKGB-02Y,
0.723%

rose after the governor of the Bank of England Gov. Andrew Bailey said the central bank would have to act to quell inflation, raising the prospects of rate increases in the country. U.S. central bank officials haven’t been as alarmed by the rise in prices.

The stunning rally in energy prices has been cited as further reason to cast doubt on the prospect for strong global growth in the wake of the COVID-19 pandemic, with analysts concerned that the U.S. could be stunted.

“An astonishing increase in the price of energy has seen European natural gas prices rise almost five-fold since the start of the year, fueling inflationary fears and concerns about a global slowdown,” wrote Seema Shah, chief strategist at Principal Global Investors, in emailed comments.

However, the strategist said that the U.S. may be more insulated from the effects of that crisis, which she said could fuel outperformance in U.S. markets.

“For its part, however, the U.S. is in a relatively good position to weather the shock. It’s energy self-sufficient, and consumers have significant excess savings to absorb higher prices. In contrast, as a large net importer of energy, Europe is more exposed,” Shah wrote.

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The moves in stocks come against the backdrop third-quarter earnings season, which kicks into higher gear this week with releases from Netflix
NFLX,
+0.79%
,
Tesla
TSLA,
+2.22%

and International Business Machines
IBM,
-0.16%
,
among others.

“The percent of companies beating expectations on both EPS and revenues has admittedly been tracking a little below last quarter’s levels, but both stats are still extremely strong relatively to history — at 79% for EPS and 82% for sales,” said strategists at RBC Capital Markets led by Lori Calvasina. “Most companies have also highlighted continued strength in underlying demand, something that has enabled investors to look past supply chain pressures (at least to some extent).”

In economic reports, a reading of U.S. industrial output was down 1.3% in September and a reading for August was lowered to a decline of 0.1% from a gain of 0.4%.

The National Association of Home Builders’ monthly confidence index increased four points to a reading of 80 in October, the trade group said Monday — the highest reading since July.

Which companies are in focus?
  • Zillow Group IncZ is pausing the purchase of U.S. homes as it works through a backlog of properties, Bloomberg News reported Sunday. Shares fell 6.7%.
  • Square Inc. SQ is contemplating building a system for bitcoin BTCUSD mining, according to Chief Executive Jack Dorsey. The payment platform’s shares were lower. Its stock was up 0.6%.
  • Walmart Inc. WMT announced the return of its “Black Friday Deals for Days” event, taking place during the month of November. Shares 0.73% higher.
  • Amazon.com Inc. AMZN said Monday that it’s looking for 150,000 seasonal hires, both full- and part-time. Its stock was up 0.3%.
How are other assets trading
  • The 10-year Treasury yield TMUBMUSD10Y rose 2 basis points to around 1.60%. Yields and debt prices move in opposite directions.
  • Oil futures edged higher, but were off their highs of the session, with the U.S. benchmark CL00 rising 0.2% to around $81.88 a barrel. Gold futures GC00 traded up less than 0.1% to reach $1,769.00 an ounce.
  • The Stoxx Europe 600 SXXP was down 0.5%, while London’s FTSE 100 UKX retreated 0.4%.
  • The Shanghai Composite SHCOMP closed 0.1% lower, and Japan’s Nikkei 225 NIK declined 0.2%.

Futures Movers: Oil rally resumes with Brent crude trading above $85 a barrel

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