Stocks rallied on Monday, with the S&P 500 ending the day out of correction territory, as traders kicked off a big week filled with a Federal Reserve rate decision, jobs report and Apple's earnings.
The Dow Jones Industrial Average gained 511.37 points, or 1.58%, to 32,928.96. The 30-stock index registered its best day since June 2.
The S&P 500 jumped 1.2% to 4,166.82 in its best performance since late August. The Nasdaq Composite rose 1.16% to 12,789.48.
Communication services was the best-performing S&P 500 sector, up by more than 2% in its best day since late August. Mega-cap tech stock stocks Amazon and Meta Platforms jumped 3.9% and 2%, respectively.
Those moves come after the S&P 500 fell into correction territory last week. The broader index shed 2.5% for the week to put it down by more than 10% from its 2023 closing high. It's off 2.8% for October, on pace for its third-straight negative month which would be its first such streak since 2020 as the pandemic struck.
"We closed on the lows last week," said Art Hogan, chief market strategist at B. Riley Financial. "Oftentimes when you get that kind of negativity going into a weekend and nothing new arises that changes the outlook for markets and the economy, you get a bit of a claw back on Monday."
"Investors are finally feeling a little bit more confident that perhaps we priced in enough bad news and that's really manifesting in a stronger market today," he added.
The Federal Reserve decision looms Wednesday, when the central bank is widely expected to hold its benchmark interest rate at the same level. With surging interest rates as the main culprit of this stock market correction, investors will be hoping the Fed signals it could be finished with its rate hiking. Traders expect the Fed to be done raising rates at least for 2023.
"Whilst we have a Fed meeting, the consensus has never been clearer that they're not going to do anything at this particular meeting, and that'll be back to back meetings of them not raising rates," Hogan said. "I think that may signal that the cycle of raising rates is over, and I think that that likely helps to sort of stop that parabolic rise we've seen in Treasury yields."
"I think if we see rates plateauing here for a bit that would certainly usher in some good news," Hogan added.
The 10-year Treasury yield jumped above 5% to start last week, but it traded around 4.89% on Monday. Friday will bring the October jobs report with investors hoping for some slowing in the labor market that will allow the Fed to feel comfortable with staying on hold the rest of the year.
Apple will report earnings Thursday after the bell. The S&P 500's largest member is in a correction itself, down 14% from its 52-week high.
— CNBC's Jeff Cox contributed to this report.
Stocks closed higher Monday.
The Dow Jones Industrial Average gained 511.37 points, or 1.58%, to 32,928.96. The S&P 500 jumped 1.2% to 4,166.82. The Nasdaq Composite rose 1.16% to 12,789.48.
— Sarah Min
Stocks remained higher during late afternoon trading Monday after the Treasury Department said it will borrow $776 billion in the final three months of the year. That was lower than the roughly $800 billion expected by strategists at JPMorgan Chase.
In July, the last time the Treasury released its borrowing needs, the amount surprised markets and drove yields to their highest levels since 2007.
The Dow Jones Industrial Average gained 563 points, or 1.8%. The S&P 500 jumped 1.3%, while the Nasdaq Composite rose 1.3%.
— Sarah Min, Jeff Cox
The S&P 500 is rallying to start the week, but Ari Wald of Oppenheimer still sees more downside ahead.
"The breach of the S&P 500's 200-day average indicates that the correction since July hasn't run its course," Wald, the firm's head of technical analysis, wrote in a note. "We see 4,050 as next support and, to mark improvement, we're watching for a key reversal day, or a rally back above 4,240."
The S&P 500 traded around 4,162 on Monday.
"Most interesting about the correction is that risk has been dragged lower by safety. This is why we believe long-term opportunity is being presented," he noted.
— Fred Imbert, Michael Bloom
Oil prices fell on Monday as investors closely followed the Israel-Hamas war while readying for the Federal Reserve policy meeting later this week.
Brent fell 2.9% at $87.88 per barrel. The U.S. West Texas Intermediate futures declined 3.5% to $82.59 per barrel.
— Alex Harring, Lee Ying Shan
Regional bank stocks were outperforming on Monday, even as the 10-year Treasury yield moved higher once again.
The SPDR S&P Regional Banking ETF (KRE) was up 1.3% in afternoon trading.
M&T Bank was one of the best performers in the fund, rising 2.9%. Zions Bancorp. jumped 2.2%.
Meanwhile, shares of Western Alliance gained 1.9%, while Regions Financial added 1.8%.
— Jesse Pound
Verizon, Goldman Sachs and Nike led the Dow higher on Monday as the index regained some ground near the end of a tough month.
The three stocks climbed more than 3% in the session, helping the blue-chip average advanced about 1.5% as a whole. Intel was the only stock of the 30 in the index on pace to end the day lower.
Despite Monday's rally, the Dow is still poised to end October 1.8% down.
— Alex Harring
Under current market conditions, Raymond James forecasts modest headwinds for the S&P 500, whereas the S&P 400 midcap index may see modest tailwinds.
"Across economic metrics with the highest correlations to equity returns, equity trends are about neutral to equity returns currently, meaning if they worsen we should expect equity markets to weaken, and if they strengthen, we should expect equity markets to strengthen," analyst Tavis McCourt said in a Sunday note.
Looking at ongoing year-over-year trends, the firm said that credit spreads, the Leading Economic Index and the Copper/Gold ratio are the most correlated economic variables to equity prices historically.
— Hakyung Kim
The S&P 500 is off to a solid start Monday after entering oversold territory last week. To be sure, Frank Cappelleri of CappThesis noted similar rebound attempts earlier in the year weren't longlasting.
Specifically Cappelleri noted that a rebound attempt off the August lows "faded aggressively."
"Potential bullish patterns were thwarted, and new lows eventually resulted – all of which the SPX has to avoid repeating for any rally to prove meaningful – whether that starts now or at some other time in the near future," he said.
— Fred Imbert
Markets will be watching closely Monday when the Treasury Department issues its quarterly financing estimates and economic statement at 3 p.m. ET.
The announcement will detail the government's borrowing needs for the next three quarters and how it sees financing conditions unfolding.
Last time the Treasury released its statement, in late July, markets were surprised by how much borrowing the government would need, and yields popped soon after to their highest levels in 16 years. Markets are hoping that expectations are more evenly calibrated this time around.
On Wednesday, the Treasury will release its refunding statement, which will set auction levels and dates.
—Jeff Cox
These are some of the stocks making the biggest moves midday:
— Alex Harring
Despite the recent pullback in technology names, Fundstrat's Tom Lee is bracing for the elite group of stocks to potentially lead the S&P 500 higher into the end of 2023.
"The mood of investors has turned somewhat cautious, so they faded decent earnings," he told CNBC's "Squawk on the Street" on Monday. "I don't think FAANG fundamentals are weaker — they're still at the center of this AI, secular story."
Many major megacap technology stocks sold off last week despite mostly solid earnings, with Alphabet posting its worst week on record since March 2020.
— Samantha Subin
ON Semiconductor was the worst-performing stock in the S&P 500 during midday trading. It last tumbled more than 18% after the semiconductor supplier company issued weaker-than-expected fourth-quarter guidance.
ON Semiconductor posted per-share earnings guidance in the range of $1.13 to $1.27, lower than the $1.36 earnings per share expected by analysts polled by FactSet. It issued revenue guidance in the range of $1.95 billion to $2.05 billion, also lower than the $2.18 billion consensus estimate.
Otherwise, the semiconductor name topped third-quarter earnings and revenue expectations.
— Sarah Min
The likelihood of a fourth-quarter rally has "fallen considerably" over the past month, according to Morgan Stanley chief U.S. equity strategist Mike Wilson.
Wilson has been forecasting the S&P 500 ending the year at 3900, making him among the most bearish strategists on Wall Street according to CNBC's Market Strategist Survey. While he noted in a Sunday note to clients that initial bullish sentiments waned in September — before picking up again this month on expectations of better third-quarter earnings and seasonal strength into the year-end — his lower estimate for the broad market index remains.
To read more about his call, click here.
— Hakyung Kim
Although the impact of the Israel-Hamas war on oil prices has been more limited than expected so far, the World Bank says an escalation of the conflict could push global commodity markets into "uncharted waters."
The World Bank's Commodity Markets Outlook offered three scenario forecasts for oil supplies and prices. Under the Bank's baseline forecast, it sees oil prices to average $90 a barrel in the current quarter and falling to $81 a barrel in 2024 as global economic growth slows.
If the conflict were to escalate, however, it sees prices gaining ground. In the case of a "small disruption scenario, the Bank estimates oil prices could rise to a range of $93 to $102 a barrel. In a "medium disruption scenario," which it says is roughly equivalent to the Iraq war in 2003, oil prices could climb up to a range of $109 and $121. A "large disruption" scenario, comparable to the Arab oil embargo in 1973, would drive up prices to between $140 and $157 a barrel, the World Bank said.
"The latest conflict in the Middle East comes on the heels of the biggest shock to commodity markets since the 1970s—Russia's war with Ukraine," said Indermit Gill, the World Bank's Chief Economist and Senior Vice President for Development Economics. "If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades—not just from the war in Ukraine but also from the Middle East."
— Hakyung Kim
Bank of Japan officials on Tuesday are expected to consider allowing longer-term bond yields to rise above a 1% cap amid a run-up in rates the central bank is trying to stave off, according to a report Monday.
Rising U.S. bond yields have spread globally and are pressuring their global counterparts, particularly since Federal Reserve Chairman Jerome Powell recently emphasized his commitment to fighting inflation. Allowing flexibility on previous yield curve caps could provide BoJ officials some breathing room, NikkeiAsia reported, citing sources familiar with the talks.
Rising U.S. bond rates have resulted in money flowing to the dollar, putting downward pressure on the yen and exacerbating inflation. Allowing some flexibility on the caps chases away speculators while helping Japan manage its own inflation issue.
The yen rose against the U.S. dollar following the Nikkei report, most recently trading at 149.21.
—Jeff Cox
Oppenheimer chief investment strategist John Stoltzfus cut his year-end target for the S&P 500 on Monday, but still sees stocks rising before January.
"We view the three-month corrective occurrence experienced by stocks since August as likely near an end. Valuations have come down substantially across the sectors ... and resilience remains the operative word for the U.S. economy," Stoltzfus wrote in a note to clients.
Check out how Oppenheimer's view compares to others on Wall Street with the CNBC Market Strategist Survey.
— Jesse Pound
The Japanese yen was up 0.3% against the dollar after Nikkei reported, citing sources, that the Bank of Japan could adjust its yield curve control tool to led government bond yields top 1%. Currently, the BOJ caps sovereign bond yields at 1%.
— Fred Imbert
Sphere Entertainment's Las Vegas venue has caught the attention of Elon Musk.
The Tesla CEO called the venue "exquisite beyond words" in a post on X, the social media platform formerly known as Twitter that he also owns. The locale, which has 17,000 seats and is part of the Venetian Resort, opened with a headline-making performance from U2 in late September.
The Sphere has gained notoriety for its high-technology experience, with approximately 168,000 square feet of LED lights and 167,000 speakers.
Shares have retreated over the course of this month after initially popping following U2's opening weekend. Sphere's stock is on pace to end October down about 10.8%.
— Alex Harring
Technology stocks bounced back on Monday following a losing week that saw the Nasdaq Composite and S&P 500 enter correction territory.
Early technology gainers included Amazon and Meta Platforms, jumping more than 3% each. Alphabet, Nvidia and Microsoft added more than 2%, while Apple and Netflix rose more than 1% each.
— Samantha Subin
The United Auto Workers and General Motors have reached a tentative deal that will bring an end to the Detroit automaker strikes, sources told CNBC reporters Michael Wayland and Phil LeBeau.
GM is the final of the three major U.S. automakers to reach a deal with the union. Ford reached a tentative deal on Wednesday, and Chrysler-parent Stellantis followed on Saturday.
Spokespeople with the UAW and GM declined to comment Monday.
— Jesse Pound