U.S. stocks ended higher on Monday, erasing the day’s earlier losses, as concerns over China’s escalating COVID outbreak added to worries about U.S. economic growth amid rising inflation and the tightening of monetary policy.
[Click here to read what’s moving markets on Tuesday, April 26]
The S&P 500 rose 0.6% to 4,296.12. The Dow added more than 200 points, or 0.7%, to settle at 34,049.46, and the Nasdaq Composite rose 1.3% to close just above 13,000. US stocks bucked the trend in global stock markets, with major stock indexes in Europe and Asia falling sharply on Monday. US Treasury yields fell and the benchmark 10-year yield was above 2.8%.
West Texas Intermediate crude futures fell below $100 a barrel on fears about the economic impact of expanding virus-related restrictions across China. Beijing saw a spike in COVID cases over the weekend that led to more mandatory testing and some lockdowns in the region. And that came as other populous cities, including Shanghai, have also recently faced new waves of infections, even as the country works to stamp out the virus under a zero-Covid policy.
In a note published last week, Bank of America economist Helen Qiao cut her forecast for China’s gross domestic product (GDP) growth to 4.2 percent from 4.8 percent in 2022 as which increased the number of blockades throughout the country.
“The COVID-19 lockdowns and restrictions imposed in Shanghai and neighboring cities are not only affecting local demand, but also causing logistical breakdowns and widespread supply chain disruptions within and outside the area,” he wrote Qiao in the note published on April 19. Given that, even if these control measures are gradually withdrawn and economic activities are gradually normalized by the middle of the year, a major impact on growth seems inevitable.”
Meanwhile, investors have also been struggling with reassertions from Federal Reserve officials last week that the central bank would take a tough stance to curb inflation. Jerome Powell, chairman of the Fed as well as San Francisco Fed President Mary Daly were among the latest to suggest they saw a case for raising interest rates by 50 basis points this year. These larger-than-usual increases would favor the Fed’s monetary policy response to short-term inflation.
The story continues
“Mr. Powell again emphasized the Fed’s focus on high prices and the need for policy to move toward neutrality to restore price stability. His comments pretty much confirm market expectations of “a 50 basis point hike at the May 3-4 FOMC meeting, which would be the first such move since 2000,” Rubeela Farooqi, chief economist at the U.S., wrote in a note in High Frequency Economics. “While Mr. Powell did not comment on the policy path beyond the May FOMC meeting, other Fed officials, including San Francisco President Daly and Chicago President Evans, have said A couple of 50 basis point hikes are possible this year.”
While Federal Reserve officials are in a quiet period this week ahead of the central bank’s meeting next week, a full slate of corporate earnings results will draw investors’ attention. In the coming days, a group of large companies and stock index components will release results, including Alphabet (GOOGL), Meta Platforms (FB), Apple (AAPL), and Amazon (AMZN).
By Friday, about a fifth of the companies in the S&P 500 had reported their actual first-quarter results. Of those, 79% beat Wall Street’s earnings estimates, while 69% beat sales expectations, according to data from FactSet senior earnings analyst John Butters. The index’s expected earnings growth rate stood at 6.6% heading into this week, which if held through the end of the reporting season, would mark the slowest growth rate since the quarter quarter of 2020, Butters noted.
4:03 PM ET: Stocks bounce back to end 3-day losing streak as traders eye Big Tech gains: Nasdaq gains 1.3%
Here were the top market moves as of 4:03 PM ET:
S&P 500 (^GSPC): +24.34 (+0.57%) to 4,296.12
Dow (^DJI): +238.06 (+0.70%) to 34,049.46
Nasdaq (^IXIC): +165.56 (+1.29%) to 13,004.85
Crude (CL=F): -$2.92 (-2.86%) to $99.15 a barrel
Gold (GC=F): -$34.70 (-1.79%) to $1,899.60 per ounce
10-year treasury (^TNX): -8 bp to get 2.8260%
2:54 pm ET: Twitter announces it will be acquired by Elon Musk
Twitter he formally announced that he agreed will be bought by Tesla CEO Elon Musk for $54.20 per share, or $44 billion.
Twitter shareholders will receive $54.20 in cash for each share they own, representing a 38% premium over Twitter’s April 1 closing level.
“Free speech is the foundation of a functioning democracy, and Twitter is the digital town square where issues vital to the future of humanity are debated,” Musk said in a press release. “I also want to make Twitter better than ever by improving the product with new features, making the algorithms open source to increase trust, defeating spambots and authenticating all humans. Twitter has huge potential – I look forward to working with the company. and the user community to unlock it.”
12:42 pm ET: S&P 500, Dow stay lower, Nasdaq pars some earlier declines
All three major stock indexes were trading lower on Monday afternoon, although the tech-heavy Nasdaq pared most of its earlier losses to trade near the flat line after 12:00 pm ET .
Shares of Chevron, Verizon and Dow Inc. led to declines in the Dow Jones Industrial Average, which was down 0.8% on Monday afternoon. In the S&P 500, the energy, materials and utilities sectors lagged, with communications services the only sector in the green.
The CBOE Volatility Index, or VIX, rose more than 8% to top 31 from the highest level since March 15.
9:31 am ET: Stocks open lower
Here’s where the stock traded just after the opening bell Monday morning:
S&P 500 (^GSPC): -38.31 (-0.9%) to 4,233.47
Dow (^DJI): -278.52 (-0.82%) to 33,532.88
Nasdaq (^IXIC): -86.85 (-0.68%) up to 12,757.91
Crude (CL=F): -$5.32 (-5.21%) to $96.75 a barrel
Gold (GC=F): -$31.40 (-1.62%) to $1,902.90 per ounce
10-year treasury (^TNX): -9.8 bp to get 2.808%
7:13 am ET: Coca-Cola beats first-quarter expectations
Coca-Cola ( KO ) reported first-quarter sales and profit which beat Wall Street estimates, with broad growth in the beverage giant’s portfolio of brands helping boost results.
Adjusted operating income grew 16% from last year to $10.5 billion, beating consensus expectations of $9.8 billion, according to Bloomberg data. Companywide unit box volume, a closely watched measure for Coca-Cola, rose 8%, with growth most prominent in the company’s nutrition, juices, dairy and plant-based beverages segment , where cash volume increased by 12%. Ultimately, the profit per comparable share reached 64 cents against the 58 cents expected.
For the full year, Coca-Cola said it expects commodity price inflation to be in the mid-single-digit percentages. It also expected the suspension of its Russian business to have a 1% impact on full-year unit cash volume and a 1-2% impact on net income and operating income.
7:06 am ET: Stock futures fall, adding to last week’s losses
Here’s where the stock was trading Monday morning:
S&P 500 futures (IS=F): -36.25 (-0.85%) to 4,231.00
Dow futures (YM=F): -270 (-0.8%) to 33,458.00
Nasdaq Futures (NQ=F): -106.75 (-0.8%) to 13,246.75
Crude (CL=F): -$4.73 (-4.63%) to $97.34
Gold (GC=F): -$23.10 (-1.19%) to $1,911.20 per ounce
10-year treasury (^TNX): -6.9 bp for a return of 2.837%
NEW YORK, NEW YORK – MARCH 30: Traders work on the floor of the New York Stock Exchange on March 30, 2022 in New York City. US stocks opened lower after rallying to start the week. (Photo by Michael M. Santiago/Getty Images)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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