US stocks ended higher on Monday, erasing earlier losses in the day as fears of an escalating COVID outbreak in China compounded concerns about US economic growth amid rising inflation and tightening monetary policy.
The S&P 500 rose 0.6% to 4,296.12. The Dow added more than 200 points, or 0.7%, to 34,049.46, and the Nasdaq Composite rose 1.3% to close just over 13,000. US government bond yields fell and the 10-year reference yield was just over 2.8%.
Intermediate crude oil futures in West Texas fell below $ 100 a barrel, with concerns about the economic impact of expanding virus restrictions in China growing. Beijing marked a jump in COVID cases over the weekend, leading to more mandatory tests and some blockades in the region. And this happened when other populated cities, including Shanghai, also recently faced new waves of infections, even as the country worked to eliminate the virus under a zero-COVID policy.
In a note published last week, Bank of America economist Helen Qiao lowered her forecast for China’s gross domestic product (GDP) growth to 4.2% from 4.8% in 2022 as the number of blockages across country increased.
“COVID-19 locks and restrictions imposed in Shanghai and neighboring cities are not only hitting local demand, but also causing logistical disruptions and widespread supply chain disruptions inside and outside the region,” Qiao said in a note published on April 19. . “In our view, even if these control measures are eventually lifted and economic activities are gradually normalized by the middle of the year, a severe blow to growth already seems inevitable.”
Investors, meanwhile, are also struggling with repeated claims by Federal Reserve officials last week that the central bank will take a firm stance to curb inflation. Fed Chairman Jerome Powell and Fed President Mary Daly in San Francisco were among the last to speculate that they had seen a 50-point increase in interest rates this year. These larger-than-typical increases would trigger the Fed’s monetary policy response to inflation in the short term.
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“Mr Powell reiterated the Fed’s focus on rising prices and the need to move policy towards neutrality in order to restore price stability. His comments largely confirm market expectations for a 50 basis point increase at the FOMC meeting on May 3-4. which would be the first such move since 2000, “Rubella Farouki, chief US economist at High Frequency Economics, wrote in a note. “While Mr Powell did not comment on the trajectory of the policy after the FOMC meeting in May, other Fed officials – including the president of the San Francisco Daily and the president of Chicago Evans – said several increases of 50 basis points were possible this year. “
Although Federal Reserve employees are quiet this week before next week’s central bank meeting, a full list of results for corporate profits will attract investors’ attention. In the coming days, many large companies and components of the stock exchange index will publish results, including Alphabet (GOOGL), Meta Platforms (FB), Apple (AAPL) and Amazon (AMZN).
As of Friday, about one-fifth of the S&P 500 companies had reported actual results for the first quarter. Of these, 79% exceeded Wall Street earnings forecasts, while 69% exceeded sales expectations, according to FactSet senior revenue analyst John Butters. The expected growth rate of profits for the index amounted to 6.6% this week, which, if carried over to the end of the reporting season, will mark the slowest growth rate since the fourth quarter of 2020, said Butters.
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16:03 ET: Stocks recover to end 3-day losing streak as traders look ahead to Big Technology gains: Nasdaq earns 1.3%
Here are the main market movements at 16:03 ET:
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S&P 500 (^ GSPC): +24.34 (+ 0.57%) to 4,296.12
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Dow (^ DJI): + 238.06 (+ 0.70%) to 34,049.46
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Nasdaq (^ IXIC): +165.56 (+ 1.29%) to 13,004.85
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Crude oil (CL = F): $ -2.92 (-2.86%) to $ 99.15 per barrel
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Gold (GC = F): – $ 34.70 (-1.79%) to $ 1,899.60 per ounce
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10-year treasury (^ TNX): -8 bps for yield 2.8260%
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14:54 ET: Twitter announces it will be acquired by Elon Musk
Twitter has officially announced that it agrees to be bought by Tesla CEO Elon Musk for $ 54.20 per share, or $ 44 billion.
Twitter shareholders are set to receive $ 54.20 in cash for each share they hold, which is a 38% premium over the level of Twitter closing on April 1.
“Freedom of speech is the foundation of a functioning democracy, and Twitter is the digital city square where issues vital to the future of humanity are discussed,” Musk said in a statement. “I also want to make Twitter better than ever by improving the product with new features, making open source algorithms to increase trust, defeat spam bots, and authenticate everyone.” Twitter has huge potential – I look forward to working with the company and the user community to unlock it. “
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12:42 ET: S&P 500, Dow holds lower, Nasdaq reduces some earlier declines
The three major stock indexes traded mostly lower on Monday afternoon, although the tech Nasdaq cut most of its earlier losses to trade close to the straight line after 12 hours of ET.
Shares of Chevron, Verizon and Dow Inc. led to a decline in the Dow Jones Industrial Average, which fell 0.8% on Monday afternoon. In the S&P 500, the energy, materials and utilities sectors lagged behind, and communications services were the only green sector.
The CBOE or VIX volatility index rose more than 8% to the top 31 for the highest level since March 15.
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9:31 a.m. ET: Shares open lower
Here’s where the stock traded just after the opening bell on Monday morning:
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S&P 500 (^ GSPC): -38.31 (-0.9%) to 4,233.47
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Dow (^ DJI): -278.52 (-0.82%) to 33,532.88
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Nasdaq (^ IXIC): -86.85 (-0.68%) to 12,757.91
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Crude oil (CL = F): -5.32 dollars (-5.21%) to 96.75 dollars per barrel
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Gold (GC = F): – $ 31.40 (-1.62%) to $ 1,902.90 per ounce
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10-year treasury (^ TNX): -9.8 bps for 2.808% yield
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7:13 a.m. ET: Coca-Cola exceeds 1st quarter expectations
Coca-Cola (KO) reported first-quarter sales and profits that exceeded Wall Street estimates, with broad growth in the beverage giant’s portfolio helping boost results.
Adjusted operating income rose 16 percent from a year earlier to $ 10.5 billion, beating consensus expectations by $ 9.8 billion, according to Bloomberg. The volume of units throughout the company – a closely monitored measure for Coca-Cola – increased by 8%, with the growth coming most noticeably from the company’s segment of food, juice, dairy and plant-based beverages, where the volume of single cans is increased by 12%. In the end, comparable earnings per share reached 64 cents against the expected 58 cents.
For the full year, Coca-Cola said it expects commodity price inflation to be in single-digit averages. He also expects the closure of his business in Russia to generate a 1% impact on unit volume throughout the year and a 1-2% impact on net income and operating income.
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7:06 a.m. ET: Stock futures are down, adding to last week’s losses
Here is where the shares were traded on Monday morning:
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S&P 500 futures (ES = F): -36.25 (-0.85%) to 4231.00
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Dow futures (YM = F): -270 (-0.8%) to 33,458.00
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Nasdaq futures (NQ = F): -106.75 (-0.8%) to 13,246.75
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Crude (CL = F): $ -4.73 (-4.63%) to $ 97.34
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Gold (GC = F): – $ 23.10 (-1.19%) to $ 1,911.20 per ounce
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10-year treasury (^ TNX): -6.9 bps to 2.837% yield
NEW YORK, NEW YORK – MARCH 30: Traders are working on the floor of the New York Stock Exchange on March 30, 2022 in New York. US stocks opened low after a rally earlier this week. (Photo by Michael M. Santiago / Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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