Dow stages big reversal Monday, closing up by more than 200 points

It's tough for equity traders right now, says Fundstrat's Tom Lee
It's tough for equity traders right now, says Fundstrat's Tom Lee

The Dow Jones Industrial Average cut a nearly 500-point intraday loss Monday as technology names like Microsoft rallied amid falling interest rates.

The blue-chip average rose 238.06 points, or 0.7%, to 34,049.46. The index was down as much as 488 points earlier in the session. The S&P 500 ticked up 0.6% to 4,296.12. The tech-heavy Nasdaq Composite gained 1.3% at 13,004.85.

Concerns about a global economic slowdown amid Covid outbreaks in China sent interest rates lower. The 10-year Treasury yield pulled back to the 2.8% level.

Tech shares rebounded as rates fell, providing support to the major averages. Microsoft rose 2.4%, the second-biggest gainer on the Dow. Google-parent Alphabet also gained nearly 2.9%, and Facebook-parent Meta added about 1.6% ahead of quarterly earnings reports slated for later this week.

Twitter jumped roughly 5.7% after the social media company announced it accepted billionaire Elon Musk's buyout deal valued at about $44 billion.

"We have a focus on mega tech stocks this week. It's so beat up, so oversold … so you're seeing money come in and get redeployed. There's opportunity," said Jeff Kilburg, chief investment officer and portfolio manager of Sanctuary Wealth.

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Stocks bounced after the Nasdaq Composite fell into a bear market last week. The Nasdaq is now down 19.8% from its record, while the S&P 500 is back in correction territory, down 10.8% from its high. The Dow is coming off its worst one-day performance since 2020 on Friday and four straight losing weeks. The S&P 500 and the Nasdaq fell for three consecutive weeks.

Wall Street is bracing for a stacked week of earnings, particularly reports from major technology companies. About 160 companies in the S&P 500 are expected to report earnings this week, and all eyes will be on results from mega-cap tech names, including Amazon, Apple, Alphabet, Meta Platforms and Microsoft.

"This week may easily be a fork in the road of equities. … Bottom-up drivers will either confirm or reject what the challenging macro backdrop has given us over the last three weeks," MKM's JC O'Hara said in a note.

Coca-Cola shares closed up nearly 1.1% after the company reported better-than-expected quarterly earnings before the bell Monday.

On the downside, fears of a global slowdown sent oil prices lower. WTI crude settled 3.5% lower Monday, back below $100.

Energy shares retreated, comprising the worst-performing S&P 500 sector Monday. Chevron fell about 2.2% and was the second-biggest decliner on the Dow. Exxon Mobil lost nearly 3.4%.