U.S. equities edged up on Monday as investors sought bargains following last week’s losses, the worst percentage drops in 2023 for Wall Street’s key indexes, as concerns about future interest rate rises to curb persistently high inflation lingered.
The three major stock indexes rose more than 1% immediately after the opening bell, thanks in part to a drop in Treasury rates, and all three ended well off their session highs.
Equities gave up gains slowly throughout the afternoon as US Treasury rates rose from the day’s lows.
“On the heels of the worst week of the year and the first three-week losing streak for the S&P since December, a little green is a welcome change, but again the reality is market participants are trying to square the circle with exactly how long the Fed will leave rates high, and is a 50 basis point hike really on the table at the next meeting?” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska.
“It’s led to a good deal of uncertainty, and we have seen that when there is uncertainty, there can be selling and volatility.”
The Dow Jones Industrial Average (.DJI) was up 72.17 points, or 0.22%, to 32,889.09, while the S&P 500 (.SPX) increased 12.2 points, or 0.31%, to 3,982.24 and the Nasdaq Composite (.IXIC) increased 72.04 points, or 0.63%, to 11,466.98.
The Dow Industrials fell by the most percentage points in a week since September, and the S&P 500 and Nasdaq fell by the most percentage points in a week since December, as economic data and comments from US Federal Reserve officials raised expectations that the central bank will become more aggressive in raising interest rates.
Analysts at UK-based banks Barclays and NatWest predict the Fed will increase interest rates by a half-point in March. Morgan Stanley believes the Fed will not cut rates this year and anticipates a slower pace of 25 basis points when it does begin cutting rates.
Fed Funds futures indicate that traders are pricing in a third 25 basis point boost this year, with rates peaking at 5.4% by September.
Fed Governor Philip Jefferson stated that he had “no illusions” that inflation would quickly return to goal and that he was determined to maintain tight monetary policy for as long as necessary.
Statistics indicated that new orders for major US-made capital goods climbed more than expected in January, while shipments of core products returned, indicating that company expenditure on equipment surged.
Easing rates helped growth stocks (.RLG) recover 0.63%, while Tesla (TSLA.O) surged 5.46% after the electric automaker announced that its facility in Brandenburg, near Berlin, was manufacturing 4,000 vehicles per week, three weeks ahead of schedule, according to a recent production plan obtained by Reuters.
Pfizer (PFE.N) is in early negotiations to purchase Seagen Inc. (SGEN.O), according to the Wall Street Journal. Pfizer’s stock fell 2.32%.
Union Pacific (UNP.N) rose 10.09% as Chief Executive Lance Fritz announced his retirement. Soroban Capital Partners, a hedge firm, has asked for his resignation.
On the NYSE, advancers outweighed decliners by a 1.69-to-1 ratio; on the Nasdaq, advancers outpaced decliners by a 1.41-to-1 ratio.
The S&P 500 set four new 52-week highs and eight new lows, while the Nasdaq Composite set 71 new highs and 102 new lows.
Volume on U.S. exchanges was 9.89 billion shares, compared to a 10.72 billion average for the whole session for the previous 20 trading days.