The Dow Jones Industrial Average rose to a new high on Monday as investors awaited fresh inflation and earnings data.
The 30-stock index advanced 125.69 points, or 0.33%, to settle at 38,797.38. The S&P 500 inched lower by 0.09% to end at 5,021.84, while the Nasdaq Composite slid 0.3% to close at 15,942.55
Salesforce dragged the Dow lower, with the cloud-based software stock sliding 1.4%. Shares of Hershey slipped less than 1% following a downgrade to underweight from Morgan Stanley on the back of softer demand.
On the other hand, Diamondback Energy rose 9.4% after announcing that it would acquire oil and gas producer Endeavor Energy Partners.
On Friday, the S&P 500 closed above 5,000 for the first time in history. The broader index has now risen more than 5% since the start of the year.
All three major averages are coming off their fifth straight week of gains, with the S&P 500 and Nasdaq Composite respectively adding 1.4% and 2.3% last week. The Dow edged fractionally higher.
"While U.S. stocks are now pricing in plenty of good news, we believe the rally has been well-supported," wrote Mark Haefele, chief investment officer of UBS Global Wealth Management.
Some 61 names in the S&P 500 are set to report earnings in the week ahead, including gig economy stocks Lyft, Instacart and DoorDash. Companies such as AutoNation, Kraft Heinz, Hasbro and Coca-Cola will also shed light on the state of the U.S. consumer.
Traders will also watch out for the latest level on the consumer price index — or CPI, a key inflationary gauge — set to be released on Tuesday morning. More key economic data is expected on Thursday and Friday, including January's reading on retail sales, production, imports and exports, housing starts and the producer price index, or PPI.
"The Fed emphasized that it would need to see 'greater confidence' in the inflation data to begin its cutting cycle. We think part of the confidence the Fed is looking for is in the composition of disinflation," Bank of America rates strategist Meghan Swiber wrote.
"To date, disinflation has been driven by goods price deflation while services disinflation has been more stubborn. We expect this divergence to persist in January," she added.
Still, the market's rally over the last three months has been unusually strong and consistent, raising the possibility a pullback could occur soon. The S&P 500 has now gone over 70 trading days without experiencing a 2% decline, according to Bespoke Investment Group.
The Dow Jones Industrial Average closed at a new record high on Monday afternoon.
The 30-stock index added 125.69 points, or 0.33%, to settle at 38,797.38. On the other hand, the S&P 500 edged 0.09% down to close at 5,021.84, while the Nasdaq Composite slid 0.3% to end at 15,942.55.
— Lisa Kailai Han
January's jobs report showed hourly earnings rising 4.5% year over year, but that doesn't mean a new bout of inflation is around the corner, according to JPMorgan Asset Management chief global strategist David Kelly.
The strategist said at the Exchange ETF conference on Monday that, if anything, American workers aren't pushing hard enough for raises, which is helping inflation fall.
"If you want to understand why we're having inflation come down at such a full employment economy, this is why: Because the American workers aren't asking for a raise. Not really, not in the way that they could," Kelly said.
He pointed to low union membership as a reason why workers are hesitating to push for big raises even with unemployment below 4%.
Kelly also said that rising productivity means that wages can grow more than inflation without causing another spike in prices.
"Wages should go up by the sum of consumer inflation plus productivity. Right now productivity growth is strong, and that means there's nothing wrong with 4% wage [growth]," Kelly said.
— Jesse Pound
Investors would be wise to remain invested in defensive names, according to Evercore ISI.
"In an environment where investor FOMO has begun to build and 1 year forward returns from 'Extreme but not yet Irrational' valuations historically project 0% upside EVR ISI Strategy prefers remaining invested but with a decided tilt toward defense," wrote analyst Julian Emanuel.
Emanuel believes that headwinds to a "Goldilocks" economic scenario could also present additional headwinds for the market and possibly skew risks to the downside. Volatility is also likely to rise, given this year's presidential election, he added.
"A defensive portfolio means overweight communication services, consumer staples and health care — sectors that tend to outperform between the Fed's last hike and first cut, and underweight economically sensitive consumer discretionary, industrials and materials, all sectors handily underperforming the S&P 500 YTD despite there being few if any 'on the ground signs' of recession being imminent," he said.
— Lisa Kailai Han
Bitcoin jumped above $50,000 Monday, at one point reaching its highest level in more than two years.
The price of the flagship cryptocurrency was last higher by 3.5% at $49,875.00, according to Coin Metrics. Earlier, it rose to $50,334.00, its highest level since December 2021. Ether was higher by more than 4% at $2,624.45, after rising to $2,638.62 for the first time since Jan. 12.
Monday's climb pulled crypto equities higher. Crypto exchange Coinbase gained more than 3% while bitcoin proxy MicroStrategy advanced nearly 10%. Several mining stocks were up double digits. CleanSpark rose about 14% and Iris Energy surged 15%. Marathon Digital gained 13%.
— Tanaya Macheel
Oil prices were little change Monday after rallying last week on tensions in the Middle East.
The West Texas Intermediate contract for March gained 8 cents to settle at $76.92 a barrel. The Brent contract for April settled at $82 a barrel, down 19 cents.
U.S. crude and the global benchmark rallied more than 6% last week after Israel rejected Hamas' conditions for a ceasefire and vowed to press with its offensive to the southern Gaza city of Rafah.
— Spencer Kimball
The S&P 500 is the stronger choice compared with the Russell 2000, according to Jeff DeGraaf, Renaissance Macro Research chairman.
DeGraaf said the benchmark S&P 500 has momentum on its side in an interview with CNBC's "Squawk on the Street" on Monday. Meanwhile, he said the small cap-focused Russell 2000 has struggled to break out.
"I don't think the Russell's bad, it's just relatively underperforming," he said, before calling the S&P 500 a "superstar."
DeGraaf noted the mix is different between the two, creating difference in performance. While the S&P 500 has rallied more than 5% this year, the Russell 2000 has added less than 1%.
Elsewhere, he said regional bank stocks have been "oversold," while noting that a breakout may have been a "bull trap."
— Alex Harring
Small-cap stocks saw outsized gains on Monday, continuing to rebound after a lackluster performance earlier in the new year.
The small cap-focused Russell 2000 climbed nearly 2% in Monday's early afternoon session. By comparison, the broad S&P 500 rose just 0.4%.
Monday's gains add to a recent rally, with the index up more than 5% in February.
That recent advance also marks a turnaround after a weak start to the year. The Russell 2000 is just around 1% higher in 2024, while the S&P 500 has added nearly 6%.
— Alex Harring
Although the S&P 500 managed to close above the 5,000 level on Friday for the first time ever, market participation remains relatively narrow, according to Canaccord Genuity.
"Despite the new record high in the SPX, less than 10% of the stocks in the index hit a new 52-week high on Friday," chief market strategist Tony Dwyer wrote in a Monday note.
This is despite the fact that the equal-weight broad market index also reached a new all-time high level on Friday. The small-cap focused Russell 2000 also rose 2.4% to notch its best week this year, but is still 17% below its record high, Dwyer added.
— Hakyung Kim
Although some shorter-term trading signals are indicating that the market is in overbought territory, upside momentum still looks strong, according to Wolfe Research.
The U.S. equity market is in a "full-on 'melt up' mode," according to chief investment strategist Chris Senyek.
Since the market's most recent bottom on Oct. 27, the S&P 500, Nasdaq 100 and Russell 2000 are all up more than 20%, according to the firm.
"In our view, the equity market 'melt up' is largely being driven by investors' 'heads I
win, tails you lose' outlook," Senyek wrote in a Monday note.
"Put differently, we believe the consensus view is that either (1) the economic outlook continues to improve, or (2) the Fed cuts even deeper than already aggressive expectations priced into the market."
Potential disappointments ahead include volatile oil prices and more struggles in the regional bank sector, per Senyek.
— Hakyung Kim
The Nasdaq Composite rose 0.3% on Monday morning to trade at 16.036.58, putting it within reach of its intraday all-time high of 16,212.23 hit on November 22, 2021. However, the tech-heavy index retraced its gains by mid-afternoon to edge fractionally lower.
The Nasdaq hit a closing record 16,057.44 on Nov. 19, 2021.
The tech-heavy index has jumped 7% since the start the year and 6% in February.
— Samantha Subin
Investment giant Fidelity is cutting the fees and changing the names for some of its active ETFs, the firm announced Monday.
These three funds have about $500 million in combined assets, according to FactSet, and the changes will take effect on Feb. 26.
In addition to those changes, Fidelity announced the launch of two new ETFs, a Large Cap Value ETF (FFLV) and a Low Duration Bond ETF (FLDB).
— Jesse Pound
British software and semiconductor designer Arm Holdings Plc soared as much 42% on Monday, two trading days after jumping 48% in reaction to earnings reported post-market Feb. 7. Arm has almost doubled in February in the wake of fiscal third quarter sales and net income, and forward financial guidance, that all exceeded analysts' highest estimates.
The issue for institutions and Main Street investors alike is the limited number of shares available for trading in Arm, which went public last September in a highly-anticipated offering at $51 a share. The stock priced at the top end of an expected range of $47-$51, and then closed 25% higher on its first day of trading.
Roughly 95.5 million shares were sold in the IPO five months ago, out of a total outstanding of some 1.03 billion. Of those 95.5 million, about 9.3 million were recently reported to have been sold short, down from 10.7 million shares the month before.
Japanese tech investor and telecom provider Softbank Corp., itself up 10% in over the counter trading Monday in the U.S., continues to own about 90% of Arm. According to FactSet, institutional investors combined only own 7.2% of Arm shares that are currently available for trading.
— Scott Schnipper
These are some of the stocks posting notable moves in Monday's session:
— Alex Harring
An economy with "overall resilience" is giving Oppenheimer's John Stoltzfus continued optimism on the equity market.
"We remain positive on stocks, view bonds as complimentary to stocks for prudent diversification and look for a further broadening of the equity rally which emerged from the lows of late October last year," he wrote in a Monday note.
The chief investment strategist of Oppenheimer currently forecasts the S&P 500 ending the year at around 5,200, or 3.4% above the index's record Friday closing level of 5,026.61.
Stoltzfus added that within equities, he favors cyclical names over defensive. "Established technology companies whose products and services are deeply embedded in the lives of business and consumers are likely to prove to be key holdings," he added.
Other attractive opportunities include the industrials, energy, materials, consumer discretionary and financials sectors.
— Lisa Kailai Han
Shares of Super Micro Computer have continued surging, adding to last year's monster gains.
The stock has already more than doubled its share value in the new year, climbing nearly 179% in 2024. That builds on 2023's jump of more than 246%.
It has climbed significantly in value every year since 2019, creating huge long-term gains. Said another way: The stock was worth $24.02 per share at the end of 2019. On Monday, shares traded around the $790 mark.
Super Micro Computer is part of the group of stocks that have soared amid investor excitement around artificial intelligence. Late last month, the California-based company announced better-than-anticipated earnings for the second fiscal quarter and offered expectation-smashing guidance for the current quarter and full year.
Shares were up more than 6% in Monday's session alone.
— Alex Harring
Traders reigning in their expectations for "aggressive" rate cuts this year has dampened the prospects of a broadening rally, according to Thomas Hainlin, senior investment strategist at U.S. Bank Asset Management.
"You've already had a recalibration there, that's why it's been hard for small-caps and mid-caps and non-tech growth sectors to continue to catch up. Now it's really just more fundamentally driven," he told CNBC in an interview. "We need to see some of those fundamentals come through with those smaller companies or those non-tech sectors to see that rally broaden out and get more durable."
Due to this, any broader market rally is likely to be more evidence-based and less based on speculation around the Fed's potential rate-cut schedule in 2024, Hainlin added.
— Lisa Kailai Han
Monday marks only the eighth trading day of February and with Nvidia's intraday gain of 2.2% the dominant maker of artificial intelligence processors is already ahead 19.8% this month.
Facebook and Instagram parent Meta Platforms rose as much as 2.05% intraday Monday, pushing its month-to-date advance to 22.2%.
Nvidia is now close to overtaking Amazon as the fourth largest stock in the so-called group of Magnificent 7 technology leaders, measured by total market capitalization (share price multiplied by shares outstanding), according to FactSet data:
— Scott Schnipper
Nvidia rallied more than 2% on Monday to hit a market capitalization of nearly $1.83 trillion and overtook Amazon in market value.
Amazon's stock was last down about 0.4%, putting the e-commerce giant at a roughly $1.81 trillion market cap.
Nvidia was last more valuable than Amazon in 2002, when both companies traded under a $6 billion market cap.
— Samantha Subin
Value and large-cap stocks look most attractive right now in the U.S., according to Barclays.
Given their high real rate exposure, the bank is also positive on value stocks in Europe.
"Value factor basket returns were weak across both regions last month but we maintain our positive view on the factor given its cheap valuation and high exposure to real rates. Our expectation for continuing improvement in the economic data can further help value style," Barclays wrote.
While the bank is positive on large-cap names over small-caps in the U.S., the reverse is true for Europe.
"High rates do not bode well for highly levered small caps in the US; also, large caps are more closely associated with quality exposure, which we view positively in the US at the moment," the bank added. "In contrast, we are more positive on small caps within European markets given their multi-decade low valuation, and improving PMIs."
— Lisa Kailai Han
The S&P 500 has reached its 70th straight trading day without notching a correction of 2% or more, according to Bespoke Investment Group. That accolade comes as the broad index continues to grind higher, closing above the 5,000 level for the first time ever last week.
Here's how the broad index has moved over the last year:
— Alex Harring