The S&P 500 closed near the flat line on Monday as investors looked ahead to pivotal inflation readings, including April's consumer price index report.
The broad market index was little changed with a small gain of 0.05%, ending the session at 4,138.12. The Nasdaq Composite added 0.18%, closing at 12,256.92. The 30-stock Dow Jones Industrial Average slipped 55.69 points, or 0.17%, to end at 33,618.69.
"At first glance, markets appear to be assuming a more tepid approach on Monday as they digest everything we learned last week, contemplate emerging tail risks, and prepare for more data later this week," according to the Goldman Sachs trading desk. "A look beneath the surface reveals a bit more agitation than that first glance might reveal."
Traders are awaiting key data that will inform the Federal Reserve's forward path: April's CPI report is due Wednesday, followed by the producer price index on Thursday.
Separately, select bank shares ticked higher to begin the week. Shares of PacWest gained 3.6%. Late Friday evening, the bank announced that it would cut its dividend to just 1 cent per share from 25 cents per share in the prior quarter. Western Alliance shares ended the day up about 0.6%. Big banks Wells Fargo and JPMorgan Chase also rose.
Investors are debating whether the banking crisis has finally abated, according to Oanda senior market analyst Edward Moya.
"It looks like Wall Street will try to find out if bank stress is nearing the end," Moya said. "This week won't be as busy as last but it will still be important."
Elsewhere, shares of Disney rose more than 2%. The company is set to report quarterly results on Wednesday.
Meanwhile, Berkshire Hathaway Class A shares rose 1%. On Saturday, Warren Buffett's conglomerate reported its first-quarter results. The conglomerate showed operating earnings increased 12% in the first quarter, while its cash hoard topped $130 billion. Buffet personally discussed topics including the latest banking crisis that rocked Wall Street, at Berkshire Hathaway's annual meeting in Omaha, Nebraska.
Stocks are coming off a volatile week that saw the Dow Jones Industrial Average and S&P 500 notch their worst weekly stretches since March. The losses came despite a late-week rally that saw volatile regional bank stocks jump off their lows.
Banks may be having a bear market rally, Strategas says
However, Strategas technical strategist Chris Verrone said in a note to clients Monday that it might still be too early to call a bottom in bank stocks.
"Following Thursday's surge in KRE volume (looked panicky with nearly 120 million shares trading hands), Regionals ended the week on a firm note finally bouncing from a very oversold condition. But we're reminded that max volume is rarely 'the low.' We're inclined to treat this like a bear market rally in Banks and to be mindful that the broader Financials sector is," Verrone wrote.
With about an hour left in trading Monday, less than 30 million shares of the KRE have been traded.
— Jesse Pound
Stocks are pricing in an overly optimistic Fed view, Morgan Stanley's Wilson says
Morgan Stanley chief U.S. equity strategist Mike Wilson thinks the stock market is overly optimistic about the chances for Fed rate cuts being accompanied by "durable growth," meaning there could be pain ahead.
"The equity market continues to expect the best of both worlds," Wilson wrote in a note Monday. "We view the likelihood of both of those outcomes playing out in concert this year as low, and our economists do not expect rate cuts in 2023."
"The bottom line from our standpoint on this front is that, tactically, equities are priced for an optimistic and lower probability outcome," Wilson said.
The S&P 500 hovered around the flatline Monday.
— Fred Imbert, Michael Bloom
Vitru shares jump 8% following an upgrade from Morgan Stanley
The recent selloff in Vitru shares presents an attractive entry point opportunity, according to Morgan Stanley.
Shares of the Brazil-based digital education company have plunged 44% since March, as of Friday's closing price. However, Morgan Stanley thinks the decline wasn't due to the company's fundamentals, but rather was "exacerbated" by the stock's limited liquidity.
Vitru's stock jumped 8% during Monday's trading session.
CNBC Pro subscribers can read more about the upgrade here.
— Hakyung Kim
JPMorgan sees American Airlines shares surging more than 100%
Investors should buy American Airlines as the air carrier's valuation is too good to pass up, according to JPMorgan.
Analyst Jamie Baker upgraded the airline's shares to overweight from neutral. Baker said this reflects a long-term shift in which "the Big 3" airlines — American, Delta and United — have seized the high ground from the "discounters."
Shares of American gained 2.4% during premarket trading on Monday.
CNBC Pro subscribers can read more about his upgrade here.
— Hakyung Kim
Catalent, Zscaler among stocks making the biggest moves midday
These are some of the names making the biggest moves during midday trading:
Zscaler — The cloud security stock rallied 22% on strong preliminary earnings and full-year guidance. Preliminary revenue, non-GAAP operating income and billings for the company's third quarter all came in above respective consensus estimates of analysts polled by FactSet.
Read the full list of names moving midday here.
— Samantha Subin
The underlying economic picture remains 'largely the same,' says Northwestern Mutual Wealth Management
Despite last week's Federal Reserve interest rate hike and the release of several economic indicators, much of the broad economic outlook remains largely the same, according to Brent Schutte, chief investment officer of the Northwestern Mutual Wealth Management Company.
"The underlying picture of the economy remained largely the same, as most reports did little to change long-term trends—the services side of the economy remained resilient, the slump in manufacturing proceeded, and the employment picture continues to defy gravity," Schutte wrote in a Monday note.
Schutte noted that the Fed's hinting at a pause in the rate hike cycle was widely expected. He added that banking crisis concerns had also largely calmed by Friday.
— Hakyung Kim
Energy stocks buoy S&P 500
The S&P 500 traded around its flatline, helped by a nearly 1% gain in energy stocks.
In total, seven of the 11 sectors in the broad index traded down. Real estate and utilities were the two worst performers, with each shedding around 0.4%.
— Alex Harring
Bitcoin slides after network congestion leads Binance to briefly halt withdrawals
Bitcoin fell to start the week, extending losses from a sharp drop over the weekend. It was last lower by about 4% at $27,787.05, according to Coin Metrics. The drop came after Binance tweeted Sunday that the Bitcoin network was "experiencing a congestion issue" and that it was temporarily closing bitcoin withdrawals as a result until the network stabilized.
"Reports of a large bitcoin outflow and withdrawals being paused at a major exchange could be factoring into some of the weakness we're seeing. Ultimately however, there haven't been any major developments as far as price action goes, with bitcoin still very much confined to a multiday bullish consolidation," said Joel Kruger, market strategist at LMAX Group.
"Only a break back below $25,000 would give reason for concern. Until then, we suspect dips will continue to be very well supported," he added.
For more details, read our full story here.
— Tanaya Macheel
Regional banks' rebound stalls
The rebound in the regional bank rally stalled on Monday, with shares of PacWest Bancorp giving up much of its early trading gains.
PacWest shares opened up nearly 30% but were last up about 5.2% in midday trading. Late Friday evening, CEO Paul Taylor said the bank's business was "fundamentally sound," while the company cut its dividend to just 1 cent per share from 25 cents in the previous quarter.
UBS upgrades Pentair shares to buy
UBS moved off the sidelines on Pentair, upgrading shares to buy from neutral.
"We upgrade PNR to Buy on the view that the pool cycle is nearing its bottom, and that the company will deliver on margin targets," analyst Damian Karas wrote in a client note on Monday.
CNBC Pro subscribers can read more about the upgrade here.
— Hakyung Kim
Six Flags surges after earnings, cites 'accelerating' season pass sales
Six Flags Entertainment jumped 21% during midday trading after exceeding first-quarter analysts' expectations.
The regional theme park company reported an adjusted EBITDA loss of $17 million, lower than the forecasted loss of $23.7 million, according to consensus estimates from FactSet. It posted a narrower-than-expected loss of 84 cents per share, compared to expectations of 89 cents per share. It posted revenue of $142.2 million, greater than the expectation of $132.6 million.
CEO Selim Bassoul said in a statement the results are "proof points that our new strategy and our new culture are beginning to take hold."
"We are still in the early stages of our transformation, but with our season pass sales accelerating and our attendance improving, we are encouraged by our recent progress," Bassoul said.
— Sarah Min
These are the stocks hitting fresh highs and lows
These are some of the other names notching new lows:
- Catalent trading at lows not seen since March 2020
- EPAM Systems trading at lows not seen since March 2022
Meanwhile, shares of Arthur J Gallagher hit all-time highs dating back to the company's June 1984 IPO.
These names also hit record highs:
- Royal Caribbean trading at levels not seen since May 2022
- General Mills trading at all-time highs back to when it began trading on the NYSE in 1928
- Verisk Analytics trading at levels not seen since April 2022
- Salesforce.com trading at levels not seen since April 2022
- Martin Marietta trading at levels not seen since March 2022
- PG&E trading at levels not seen since February 2020
— Samantha Subin
Novo Nordisk shares recovering from last week's dip
Novo Nordisk shares continued to recover from last week's stumble as more investors buy into the long-term story for its obesity drug franchise. The U.S.-traded shares were up 3% in trading on Monday.
Last week, the stock sold off as the company said it was once again limiting supplies of starter doses of Wegovy to make sure it can serve existing patients. New patients taking the weight-loss medication titrate to the drug's full dose in order to limit any potential side effects. Robust demand for the GLP-1 medication has led to periodic shortages since its launch.
—Christina Cheddar Berk
Catalent plummets 26% on earnings delay, expected guidance cut
Shares of Catalent tumbled more than 26% after the company announced it's delaying the release of its fiscal third-quarter results and expects to "significantly reduce" its 2023 guidance.
Earlier this year, the contract drug manufacturer warned that slower production and higher costs could weigh on its results.
Catalent said it had found certain potential non-cash adjustments related to its operations in Bloomington, Indiana, requiring more time to review its results for the third quarter.
The company also said it found "significant issues with its forecasts over the past year, which are currently being addressed," adding that it expects to release results for the recent period on May 15.