U.S. stocks fell Monday, led downward by the tech-heavy Nasdaq Composite, as investors grew increasingly cautious of rising bond yields.
The Dow Jones Industrial Average lost 34.99 points, or 0.1%, to end at 33,891.02. The 30-stock index made up some ground after losing more than 240 points earlier in the session.
The S&P 500 slid 0.61% to close at 4,111.08. The Nasdaq Composite posted the biggest loss of the three, sliding 1% to end at 11,887.45.
Investors were taking some profits after the stock market's hot start to the year. The S&P 500 is up more than 7% for 2023, while the Nasdaq Composite has advanced for the last five weeks, a streak not seen since November 2021.
Treasury bond yields rose, with the benchmark 10-year yield up by nearly 11 basis points at 3.64% and the 2-year yield adding around 18 basis points to 4.48%. The ICE U.S. Dollar Index rose as much as 0.76% Monday, further contributing to the decline in stocks.
Apple shed 1.8%, pressuring the Dow as concerns over higher rates weighed on some tech stocks. Retail stocks Target and Nike also ended the session down, while defensives such as Merck and Coca-Cola advanced.
"Most stock market participants are a little shook ... by the huge increase in yields for a second straight day," said George Cipolloni, portfolio manager at Penn Mutual Asset Management. "The move in the 2-year over two days is incredible. And I think that's driving most of the moves."
Monday marked the start of another week packed with earnings. Tyson Foods fell 4.6% on the back of a weaker-than-expected earnings report. The Children's Place, a kids' apparel retailer, lost 4% after it pulled back its outlook for its fourth quarter.
Disney, Chipotle, DuPont and PepsiCo are among the major companies reporting earnings later this week, which investors will be watching for any indications that prior interest rate hikes have hurt companies' finances. With the earnings season about halfway over, profits for S&P 500 companies are on pace to be 2.7% lower for the fourth quarter, according to Refinitiv.
"Last week was kind of all about monetary policy and the Fed, the European Central Bank and the Bank of England," said Tom Hainlin, the U.S. head of global investment strategy of U.S. Bank's Ascent Private Capital Management. "This is really about corporate America and what they're seeing."
Investors will also watch Tuesday for Federal Reserve Chairman Jerome Powell's remarks before the Economic Club of Washington. Last week, Powell's comments on disinflation caused investors to bid shares higher and overlook another rate hike out of the central bank.
Stocks ended Monday in the red as concerns over high bond yields weighed on investors.
The tech-heavy Nasdaq Composite led the three major indexes down, losing 1% in the session. The S&P 500 ended down 0.6%, while the Dow shed 0.1%.
— Alex Harring
It's time to jump back into the Spotify bandwagon, according to Wells Fargo.
Analyst Steven Cahall upgraded the audio streaming stock to to overweight from equal weight, saying the company is now "off margin probation." The upgrade comes a week following the company's strong fourth-quarter earnings report.
"When we upgraded SPOT to Equal Weight it was predicated on management showing progress against margin targets. Opex is demonstrating leverage as OI losses improve, and we think SPOT will be break-even in 1Q24," analyst Steven Cahall wrote in a client note on Monday.
CNBC Pro subscribers can read more about his upgrade here.
— Hakyung Kim
Bed Bath & Beyond shares more than doubled during afternoon trading Monday as volatility continued to rock the battered retail stock.
The surge in shares come as retailer warned in recent weeks that it's missed payments to debtholders, and is running out of cash and weighing filing for bankruptcy.
Bloomberg also reported that employees have yet to receive owed severance payments.
Shares were last up 113% shortly after 3:30 p.m.
Other popular meme stocks GameStop and AMC Entertainment were last up 6.5% and 13%, respectively.
— Samantha Subin
Goldman Sachs, which already was doubtful of Wall Street's recession expectations, thinks there's even less of a chance now.
The firm cut its recession probability for the next 12 months to 25%, down from 35% previously. That's well below the 65% expectation from the most recent Wall Street Journal survey.
"Continued strength in the labor market and early signs of improvement in the business surveys suggest that the risk of a near-term slump has diminished notably," the firm said in a client note Monday.
GDP is likely to grow just 0.4% in the first quarter but then accelerate through the year, Goldman added.
—Jeff Cox
Stocks traded down — where they have been for the majority of the session — as the final hour of trading kicked off.
The Dow was down 0.1%, making up a sizable chunk of its prior loss. It briefly turned positive in the afternoon.
The S&P 500 and Nasdaq Composite were down 0.6% and 0.9%, respectively.
— Alex Harring
The Dow moved to trading positive, erasing a loss of more than 240 points earlier in the day.
The 30-stock index traded up about 0.1%, or 20 points, around 2:20 p.m. It previously hit a session low of 0.7% down, which equates to 242.43 points.
Meanwhile, the S&P 500 and Nasdaq Composite remained in the red.
— Alex Harring
Twelve stocks have gained more than 20% upon their fourth-quarter earnings reactions this season, while only three have fallen by the same amount, according to Bespoke Investment Group.
Among the biggest gainers are Qualtrics , education tech company 2U, 1-800-FLOWERS.COM, Align Technology, Stride, Peloton, and Facebook parent Meta, which is the 10th biggest one-day gainer of the pack. Align earlier today announced a $250 million accelerated stock repurchase agreement with Citibank, sending its shares up 3.6%.
Software company Bill.com and retailers Hanesbrands and Canada Goose each dropped by more than 20% on earnings reactions this quarter.
— Pia Singh
The Dow performed the best of the three averages Monday, trading down just 0.1% around 1:30 p.m. It had fallen more than 240 points, or 0.7%, earlier in the session.
Buoying the 30-stock index was Caterpillar, Travelers Companies, McDonald's, Merck and UnitedHealth, which all gained more than 1% in the session. One-third of the stocks in the index traded up.
But laggards kept the index below the flatline. Intel dragged the most with a 3.2% loss. Walgreens traded down about 2%, while Cisco, Apple and Nike all shed more than 1.5%.
— Alex Harring
All 11 sectors within the S&P 500 traded in the red Monday.
Communication service and materials posted the biggest losses at 1.3% each.
Consumer staples and utilities performed the best, with each down just 0.1%.
— Alex Harring
A shortfall in active riders could weigh on Lyft's growth, according to Gordon Haskett.
The firm downgraded the riding sharing company's shares on Monday to hold and lowered its price target from $24 to $29.
"Beyond concern about an active rider shortfall and likely downward top- and bottom-line revision to 2023 and 2024 earnings estimates, we've become increasingly concerned about Lyft's (1) ability to sustain [low double digit percentage] higher pricing relative to Uber, which we believe has been a contributing factor behind improving wait times and (2) predominantly US-based business model given what we expect will be a turbulent U.S. regulatory environment in the months/quarters ahead," Robert Mollins, an analyst at Gordon Haskett, said in a note.
He added that the firm favors Uber, even though it sees a challenging regulatory environment, due to Uber's "geographically diverse business mode as a partial shield against possible unfavorable rulings in the U.S."
— Tanaya Macheel
These stocks are among those making the biggest moves in midday trading today:
Click here to see more stocks making midday moves.
— Pia Singh
Bond yields rose while stocks fell in Monday trading. Sylvia Jablonski, CEO of Defiance ETFs, said the inverse relationship could reverse, but investors should still expect volatility in the short term.
"There's a little bit of a disconnect right now in in both markets," Jablonski said in an interview with CNBC. "A lot of it just lays on the uncertainty of: unemployment remains low, but inflation has also come down, but the Fed's not at the 2% target."
— Alex Harring
Bernstein is getting bullish on Diageo.
Analysts Trevor Stirling upgraded the Johnnie Walker and Ketel One parent to outperform from market perform. He also hiked his price target on the company's U.S.-listed shares to $225 from $215. The new target implies upside of nearly 30% from Friday's close.
"They are well-positioned to profit from the long-term structural growth in US spirits and have great momentum in emerging markets (primarily spirits in LatAm and Asia but also in pockets of Africa). We are confident that they will hit the upper end of their long-term guidance of 5%-7% organic top-line growth, with Operating Profit growth a point ahead," Stirling said in a Monday note.
CNBC Pro subscribers can read more about his upgrade here.
— Hakyung Kim
Treasury yields jumped on Monday as investors awaited clues from Federal Reserve speakers on the next steps for monetary policy.
The yield on the 1-year T-bill leapt as high as 4.841% Monday morning, and the rate on the 2-year note jumped to 4.412%. These are the highest levels since Jan. 6. Yields on longer-dated Treasurys ticked higher, too, with the rate on the 10-year note climbing as high as 3.619%, the highest level since Jan. 10. Bond yields move inversely to prices.
Yields have been trending higher since the Fed embarked on its rate-hiking campaign last year, and bond prices tumbled. However, an opportunity has since opened for investors hoping to snap up these fixed-income instruments on the cheap and collect an attractive yield.
Read more on where advisors are looking to play the rising rate environment here.
-Darla Mercado, Gina Francolla
Despite the S&P 500 trading down, more stocks within it are hitting new 52-week highs than lows.
Centene hit a low not seen since December 2021 and was the sole S&P 500 to post a 52-week low early Monday.
On the other hand, three components were at highs not seen in more than a year. Regeneron and ON Semiconductor hit levels not seen since their respective initial public offerings in February 1991 and May 2000. Ametek, meanwhile, traded at a high not reached since December 2001.
Outside of the broad index, Sirius XM traded at a low last touched in September 2020.
The following four stocks hit highs not seen in at least a year:
— Alex Harring, Chris Hayes
Stocks could be due for a positive year after their strong January performance, according to CFRA.
"Since 1945, whenever the S&P was higher in January, the market posted an average price increase of 15.8% (versus the average annual gain of 8.9% for all years) and rose in price 85% of the time (compared with the more normal 71% batting average)," CFRA's Sam Stovall wrote in a Monday note.
"And if that weren't optimistic enough, a down year (like 2022) that was followed by positive January Barometer saw the S&P 500 gain 23% for the full year and rise in price 92% of the time," he added.
The strategist cited the January Barometer, a technical indicator popularized by The Stock Trader's Almanac.
To be sure, past performance may not necessarily repeat, but the strategist said "it certainly offers encouragement" to investors.
— Sarah Min
Tesla shares outperformed during early morning trading, bucking the broader market downtrend.
Shares of the electric vehicle stock were last up about 2.5% as of 10:10 a.m.
The move in shares comes as optimism and demand improves in China after the company initiated a slew of price cuts targeting some of its best-selling models.
Given this backdrop, Wedbush's Dan Ives upped his price target on shares to $225 from $200, implying more than 18% upside for the stock from Friday's close. The electric vehicle maker also got a price target increase from RBC Capital Markets to $223 from $186 a share, citing the positive price cut response.
"The macro remains uncertain and a recession could likely be on the doorstep, however Tesla is now positioned well with its price points with demand outstripping supply so far in 2023," Ives wrote.
So far this year Tesla shares have been on a tear, up nearly 57% after plummeting 65% during 2022's market rout. In January, shares posted their best week in over a decade.
— Samantha Subin
Shares for Disney could see big gains going forward, according to Morgan Stanley.
Analyst Benjamin Swinburne reiterated his overweight rating on Disney ahead of its earnings announcement on Wednesday. He also noted that his bull case scenario is now in play after the stock's hot start to 2023.
Morgan Stanley has a bull case price target of $150 per share on Disney, which implies upside of 36.1% from Friday's close. The bank's base case target is $115, which points to upside of just 4.5%.
CNBC Pro subscribers can read more about the analyst's forecast here.
— Hakyung Kim
The three major indexes were down as trading kicked off Monday.
The Dow lost 87 points, or 0.3%. Meanwhile, the S&P 500 and Nasdaq Composite dropped 0.4% and 0.6%, respectively.
— Alex Harring
While Adidas, Under Armour and Wolverine World Wide are fresh picks, investors should take some caution on these stocks after their recent rally, according to Baird.
The investment firm took "cautious trading calls" on those apparel brands through July, ahead of calendar second quarter reporting, according to a Sunday note. The firm said positive sentiment is more than baked into the stocks following raised investor hopes of a Fed pivot.
"While cycling prior-year headwinds should help earnings, back-weighted consensus projections may prove unattainable in the event of any economic softening (our C2023E EPS remains ~15% below consensus)," analyst Jonathan R. Komp wrote.
The apparel stocks have surged in 2023. Shares of Adidas jumped 27% this year, while Under Armour is more than 24% higher, as of Friday's close. Meanwhile, Wolverine World Wide shares soared more than 48%. Those rallies raise the risk of future downside for these names, according to the analyst.
"Valuation no longer provides significant margin for error, and we are signaling a more cautious stance on stocks with high operating leverage and/or questionable balance sheet/inventory health," Komp wrote.
— Sarah Min