The Dow Jones Industrial Average added more than 300 points on Monday, as Wall Street shows resilience despite an oil output cut from OPEC+ that threatens to stoke inflation and recession fears.
The Dow climbed 327 points, or 0.98%, to close at 33,601.15. The S&P 500 ticked higher by 0.37%, closing at 4,124.51. It was the fourth positive session for both indexes. The Nasdaq Composite slid 0.27% to end the session at 12,189.45.
Markets spent much of the trading session digesting the news from OPEC+ which is slashing 1.16 million barrels per day. West Texas Intermediate futures gained 6.28% to settle at $80.42, and Brent futures rose 6.31% to settle at $84.93.
The prospect of higher oil prices could add further unease to Wall Street as the output cut plays out, according to Morningstar energy strategist Stephen Ellis.
"The actual cut itself was less of a surprise, given the large increase in global inventories and recession concerns, likely increased by the recent banking struggles," he said. "Higher oil prices are likely to provide a modest boost to inflation, providing more of a dampening effect on the economy."
But Wall Street is shaking off the latest development, and adding to a recent string of gains. All three major averages were positive in the first quarter, despite turmoil in the banking sector highlighted by the collapse of Silicon Valley Bank in March. The Nasdaq Composite led the way in the quarter with a gain of 16.8% while the S&P 500 rose 7% in the first three months of the year for its second-straight positive quarter. The Dow lagged but still managed to grind out an advance of 0.4%.
The Energy Select Sector SPDR fund (XLE), which tracks the S&P 500 energy sector, popped more than 4%. Marathon Oil and Halliburton were the fund's best performers, rising nearly 9.9% and 7.7%, respectively.
Still, the recent rally may be short lived given stronger macroeconomic factors, according to OANDA senior market analyst Ed Moya.
"This current macro backdrop isn't conducive for a meaningful stock market rally: The economy is recession bound as the consumer is clearly weakening, lending is about to get ugly, energy cost uncertainty will remain elevated for a while, and monetary policy is finally restrictive and about to break parts of the economy," Moya said.
The first week of the new quarter is a shortened one for Wall Street, as trading will be closed for Good Friday. However, there will be several key pieces of economic data for investors, including job openings data on Tuesday, ADP private payrolls report on Wednesday and the closely watched monthly jobs report on Friday.
The Dow Jones Industrial Average ended the day with a 327 point gain, rising 0.98% to close at 33,601.15. The S&P 500 ended the day 0.37% higher, closing at 4,124.51. It was the fourth winning session in a row for both indexes.
The Nasdaq Composite was the outlier, falling 0.27% to close at 12,189.45.
A survey released Monday from Brown Brothers Harriman suggests that active ETFs are gaining popularity as investors continue to shift away from traditional mutual funds.
The results showed that 82% of the surveyed investors plan to hold steady or increase their holdings of active ETFs this year, and 92% of them bought one in the last 12 months.
The investor base for the survey included 325 global respondents across institutional investing, financial advisors and fund managers. The report said 40% of the respondents manage more than $1 billion.
Additionally, the main factor in how U.S. investors chose an ETF was the expense ratio, the survey showed.
— Jesse Pound
Tesla shares were down 7%, near the lows of the day, following the release of weaker-than-expected deliveries data for the first quarter. Tesla delivered 422,875 vehicles in the first quarter, while analysts polled by FactSet expected 432,000.
— Fred Imbert
Morgan Stanley's chief U.S. equity strategist Mike Wilson warned investors on Monday that the tech sector's recent outperformance may not last.
Tech is the best-performing sector this year, up more than 20% and outpacing the S&P 500′s 7% advance.
"On the defensiveness point, our work suggests that Tech is actually more pro-cyclical and bottoms coincidently with the broader market in bear markets due to its beta of just over 1 and its high correlation to the business cycle," Wilson wrote in a note Monday.
"We advise waiting for a durable low in the broader market before adding to Tech more aggressively as the sector typically experiences a period of strong outperformance post trough—a time when its cyclicality works in its favor on the upside.
CNBC Pro subscribers can read about Wilson's preferred sectors and stock names here.
— Hakyung Kim
Bank of America named hardware retailer Lowe's as one of its best investment ideas.
"We are adding Lowe's Cos Inc. (LOW). We are renewing Thomson Reuters Corp (TRI) following 52 weeks on the list," analyst Nathan Zibilich wrote in a Monday note
Shares of Lowe's were up 1.3% on Monday afternoon. The stock has gained 1.5% year to date.
— Hakyung Kim
The S&P 500's strength at the end of March could indicate the benchmark index is set to break out of its trading range, according to Roth MKM chief market technician JC O'Hara.
The Nasdaq 100 surpassed February highs in March, which earned the index its best quarter since 2020. O'Hara posits that given the S&P 500 showed similar behavior last month and finished march 4.08% higher, the index could likewise surpass a February high of 4,200.
"Overall, we find the strength of the Technicals has improved yet the tolerance for risk assets as
measured from market-based indicators remains negative," O'Hara said. "To sum it up, we do not yet have an all-clear signal for stocks, rather a plethora of mixed signals but ample opportunities."
— Brian Evans
Bernstein analyst Stacy Rasgon upgraded Intel to market perform from underperform, saying he doesn't like the stock but could see improvement over the medium term.
"We hate this call but think it's the right one," Rasgon said in a note to clients Monday.
"We have been decidedly negative on Intel's prospects for quite some time, a stance clearly justified by the company's utter collapse as a weakening market and poor decisions shaved billions off the top line, burned billions in cash, and crashed the stock price by almost 50% since CEO Pat Gelsinger arrived," he added. "But while things still look bad, tactically we believe the medium-term set-up is, finally, improving a bit, as the company's issues are known, and numbers (for the first time in a while) may be low enough to stand."
Traders on CNBC's "Halftime Report" remained pessimistic. Sarat Sethi, managing partner at Douglas C. Lane & Associates, said Intel does not have a positive catalyst in the next three to six months.
"I think you've got some time here, especially as we see the market being choppy," he said. "If tech is going to pull back, I just don't see Intel separating themselves from the rest of the pack."
— Alex Harring
Monday's lower-than-expected ISM Manufacturing Index numbers have left the Federal Reserve's decision whether to raise interest rates in May at a near-toss up, according to Comerica Bank's chief economist Bill Adams.
"Manufacturing and the rest of the goods side of the economy is in recession, but most US output and employment is in services, which held up better in early 2023," Adams wrote in a note to clients on Monday. "The Fed will be glad to see less inflationary pressure in the manufacturing ISM survey, but what they are really looking for is less inflation from service-providing industries. Progress on that side of the economy has been slower."
Comerica still forecasts unchanged interest rates at the Fed's early May meeting, but Adams noted that rates can rise easily if growth and inflation levels come in higher-than-expected this month.
— Pia Singh
Here are some of the names making the biggest moves in midday trading.
To see more companies making midday moves, read the full story here.
— Michelle Fox
McDonald's briefly traded at a high of $282.13 per share and was last up 0.8%. Utla, meanwhile, rose to $548.78 per share.
Monday's session kicked off the April trading month. That's historically the best month of the year for the Dow.
In an average April since 1950, the 30-stock index has gained 1.9%, according to the Stock Trader's Almanac. By comparison, the index has gained 0.7% in the average month over the same time period.
And more good news: The Dow typically performs even better in the April proceeding an election year. In these Aprils, the Dow rose 3.9% on average.
To be sure, it's typically a good month across the board as investors look to the second-quarter and move past tax season, among other reasons. It's historically been the second best month of the year for the S&P 500 and fourth best for the Nasdaq Composite.
CNBC Pro subscribers can click here to read more about why the blue-chip index usually performs so well in April.
— Alex Harring
Wells Fargo reiterated its overweight rating on Walmart, saying the company remains an "attractive investment option" with its recent share gains and alternative profit streams.
Walmart has had a good start to the first quarter given continued inflation in food prices, a favorable margin comparison and conservative full-year guidance, equity analyst Edward Kelly wrote in a note to clients on Monday. The firm's price target of $155 suggests a 5.1% increase from Walmart's closing price on Friday. The stock is up 0.6% today and nearly 5% this year.
"That being said, it's only two months into the year, much consumer uncertainty remains, and WMT seems very focused on credibility," Kelly wrote. "We expect the company to talk positively about its start to the year, but a guidance raise feels less certain."
The firm expects Walmart's technology initiatives could drive further share gains and uplift investor sentiment ahead of the retailer's investor day on April 4-5, noting that these initiatives are growing popular with higher-income households. Walmart expects weaker sales in the months ahead.
— Pia Singh
"OPEC's pricing power is higher than it has ever been," Jeffrey Currie, Goldman Sachs' global head of commodities research, said Monday in a CNBC "Squawk Box" interview. "They are going to continue to exercise that power."
The Wall Street firm also boosted its forecast for December 2024 to $100 per barrel from $97 per barrel.
To read more about Goldman's call, read the full CNBC Pro story here.
— Michelle Fox
OPEC+'s timing of announcing an oil output cut is more surprising than the actual pullback itself, according to Morningstar energy strategist Stephen Ellis.
Most of the surprise factor stems from the announcement taking place outside of a formal meeting, Ellis said. The actual production cut itself, which equates to 1.16 million barrels per day, wasn't necessarily a shock because global inventories remain robust.
"We had expected OPEC to shift to a tightening stance," Ellis said. "Note that Russia's 500,000 bpd cut was already announced months ago, and with OPEC already producing about 2 million barrels per day below target levels, the actual size of the production cut will be materially less than headline figures."
Oil prices are gaining so far on Monday, with both West Texas Intermediate and Brent crude adding 6%.
— Brian Evans
Warren Buffett's two big energy stocks staged a strong rally Monday as the broader sector got a boost from surging oil prices.
Meanwhile, Chevron, Berkshire's third largest holding as of the end of 2022, rose over 4% on Monday. The conglomerate drastically hiked this stake to one of its biggest early last year.
— Yun Li
Shares of UnitedHealth Group are up nearly 4% after The Centers for Medicare & Medicaid Services on Monday proposed rules to update the hospice wage index, payment rates and aggregate cap amount for fiscal year 2024.
The Centers for Medicare & Medicaid Services expects an estimated increase of $720 million in payments to hospices resulting from the updated 2.8% hospice payment increase for FY24. According to StreetAccount, the proposed payment rate increase for FY23 was 2.7% and the final rate for FY23 was 3.8%.
UnitedHealth also got a boost from a smaller-than-expected cut to 2024 reimbursement rates for health insurers offering coverage through Medicare Advantage.
— Pia Singh
Manufacturing activity in the U.S. slipped further into contraction territory in March, according a reading Monday.
The ISM Manufacturing Index, a closely watched barometer for the sector's health, posted a reading of 46.3 for the month. That was down from 47.7 in February and below the Dow Jones estimate for a 47.3 reading.
Anything below 50 represents contraction for the index, which measures the percentage of companies that report expansion. The March reading was the worst in three years.
The prices index fell 2.1 points to 49.2, while employment dropped 2.2 percentage points to 46.9. None of the sub-indexes were above 50.
Tesla traded down more than 4% in early trading on Monday as investors digested delivery and production numbers released over the weekend.
The electric-vehicle maker reported 422,875 deliveries in the first quarter. While that marked a 36% increase over the same period a year ago, the company fell short of the 432,000 delivery consensus expected by analysts polled by FactSet. Meanwhile, 440,808 vehicles were produced in the quarter.
Some analysts also said the data can show the electric vehicle maker may have to cut prices further in the future. CNBC Pro subscribers can read more about their predictions here.
— Alex Harring
WWE stock fell roughly 7% in the company's first decline since March 22, when shares tumbled to $84.18. Shares of Endeavor, meanwhile, were essentially flat with a 0.1% decline on Monday.
The merger will see the UFC and WWE combine into a new publicly traded company, with Endeavor owning a majority 51% stake and WWE shareholders owning 49%.
— Brian Evans
Leon Cooperman said Monday he's bullish on oil prices and his energy stock picks, which take up 20% of his portfolio.
"I think world travel is going to come back, which will stimulate demand. China is going to come out of lockdown," Cooperman said CNBC's "Squawk Box." "I think we're going to have to replenish the Strategic Petroleum Reserve."
— Yun Li