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. Canada’s main stock index gained modestly, also boosted by tech stocks even as energy shares weighed down performance.
Treasury yields fell ahead of readings on U.S. inflation and a new supply of U.S. government debt this week, with the benchmark 10-year U.S. Treasury yield hitting a low of 3.966% during the session.
That lifted big tech stocks such as Amazon.com, which closed up 2.66%, and Alphabet, which rose 2.29%. Shopify rose 4.2%. In addition, Apple 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 surged 6.3% and fellow chipmaker Advanced Micro Devices jumped 5.48%, helping to push the Philadelphia SE Semiconductor Index up 3.28% as it bounced from a 5.8% drop last week, its biggest weekly percentage fall since October 2022.
“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.”
Meanwhile, Boeing 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 737 MAX 9 in mid-flight, forcing a dramatic landing of the airliner over the weekend.
The Toronto Stock Exchange’s S&P/TSX composite index was up 137.36 points, or 0.66%, at 21,074.91, with the tech sector gaining 2.9%.
Energy stocks shed 2% as oil prices fell on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output.
U.S. West Texas Intermediate crude futures lost $3.04, or 4.1%, at US$70.77 a barrel. Oil climbed more than 2% in the first week of 2024 as geopolitical risk in the Middle East intensified after attacks by Yemen’s Houthis on ships in the Red Sea.
On Sunday, rising supply and competition from rival producers prompted Saudi Arabia to cut the February official selling price (OSP) of its flagship Arab Light crude to Asia to the lowest level in 27 months.
A Reuters survey on Friday found that OPEC oil output rose in December as increases in Angola, Iraq and Nigeria offset continuing cuts by Saudi Arabia and other members of the wider OPEC+ alliance.
“If we were just to focus on the fundamentals, including higher inventories, higher OPEC/non-OPEC production and a lower than expected Saudi OSP, it would be impossible to be anything other than bearish on crude oil,” said IG analyst Tony Sycamore.
“However, that doesn’t take into account the fact that geopolitical tensions in the Middle East are undeniably rising again, which will mean limited downside.”
Investors are now gearing up for the quarterly earnings season, which big U.S. banks will kick off on Friday. Data on U.S. consumer prices due on Thursday will also be on the watchlist for further cues on the interest rate path.
The Dow Jones Industrial Average rose 216.90 points, or 0.58%, to 37,683.01, the S&P 500 gained 66.30 points, or 1.41 %, to 4,763.54 and the Nasdaq Composite 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.
The S&P 500 energy index was the sole decliner among the 11 S&P 500 sectors, falling 1.16%.
On Friday, the benchmark S&P 500 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 labour 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.
In individual stock moves, shares of Air Canada rose 3.4% after it said more consumers flew its airlines during the holiday.
Canada Goose Holdings and Bombardier rose 4.7% and 6.9% respectively on price target hikes by analysts.
Air Transat gained 4.2% after the Canadian leisure carrier agreed a new labour contract with the Canadian Union of Public Employees.
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.
Reuters, Globe staff