US equities closed higher on Monday, with the Dow rising 1.20%, the S&P 500 up 1.16%, and the Nasdaq gaining 1.16%. The Russell 2000 trailed with a 0.30% increase. This rebound came after a difficult week, where the S&P 500 suffered its worst performance since March and the Nasdaq saw its steepest drop since January. The declines were driven by a selloff in big tech and semiconductors, with stocks like Apple (AAPL, Information Technology) and Alphabet (GOOGL, Communication Services) lagging on Monday. However, semiconductors, aerospace and defense, IT services, cruise lines, copper and steel, airlines, banks, credit card companies, and auto suppliers all outperformed.
At the sector level, Tech shares rebounded from oversold conditions while Financials, Industrials and Discretionary shares also outpaced the S&P 500. XLC was a laggard spurred lower by the sell-off in GOOG. A mix of defensives and commodity linked sectors were also among the laggards as the bull had control of the tape.
In fixed income, Treasuries showed mixed results with the yield curve flattening. The 2-year yield hit its lowest point since September 2022, and the 10-year yield dropped to levels not seen since June 2023. The spread between the 2-year and 10-year turned positive for the first time since July 2022. Meanwhile, the US dollar index rose 0.4%, gold finished the day up 0.3%, and copper rallied 1.7% after a 3.3% drop last week. Bitcoin futures surged 6.6%, recovering from an 8.6% decline the previous week. WTI crude oil ended 1.5% higher after last week’s 8% decline, marking the lowest levels since June 2023.
Monday’s market activity was relatively quiet, with investors continuing to focus on the upcoming FOMC meeting on September 18. Despite ongoing concerns about economic growth following a disappointing August payroll report, markets still only priced in a 27% chance of a 50-basis point rate cut. Fed officials, including New York Fed President John Williams and Governor Christopher Waller, signaled support for a 25-basis point cut, suggesting that while the labor market is cooling, it is not deteriorating sharply. On the bullish side, investors are encouraged by the potential start of a rate-cutting cycle, strong labor market data, ongoing M&A activity, and robust AI demand. However, bearish narratives continue, including scrutiny around the AI trade, weakening consumer trends, negative September seasonality, and concerns over the yen carry trade.
The economic calendar was light, with the August Manheim used car index showing a 1.2% month-over-month increase for the second consecutive month. The New York Fed’s Survey of Consumer Expectations showed that inflation expectations remained stable at the one- and five-year horizons, while the three-year outlook rebounded slightly after a dip last month. Unemployment expectations ticked higher. Investors are now focusing on Wednesday’s August core CPI report, which is expected to show a 0.2% month-over-month and 3.2% year-over-year increase. Despite this, some market participants are placing less emphasis on the CPI report, with the Fed’s focus increasingly shifting toward employment data. Treasury supply is also in the spotlight this week, with $148 billion in auctions expected.
In global markets, China’s August CPI growth came in below expectations, while PPI deflation worsened more than forecast. This added to concerns about slowing growth in China.
Notable gainers included Summit Therapeutics (SMMT, Health Care), which surged 56% after its ivonescimab monotherapy showed a 49% reduction in the risk of disease progression or death compared to pembrolizumab. Palantir (PLTR, Information Technology) jumped 14.1% following its addition to the S&P 500, while JetBlue Airways (JBLU, Industrials) rose 7.2% after Bank of America upgraded the stock, citing lower fuel prices and steady travel demand. Arm Holdings (ARM, Information Technology) gained 7% on reports that Apple will use its V9 chip architecture, which commands higher royalties. United States Steel (X, Materials) increased 5% after an upgrade from JPMorgan, driven by easing capex requirements and a positive cash flow outlook.
On the downside, Methanex (MEOH, Materials) dropped 7.9% after announcing plans to purchase OCI’s methanol business for $2.05 billion. Merck (MRK, Health Care) fell 2.1% as it was negatively impacted by the positive clinical trial results from Summit Therapeutics (SMMT)
Eco Data Releases | Tuesday September 10th, 2024
S&P 500 Constituent Earnings Announcements | Tuesday September 10th, 2024
No S&P 500 Constituents report today
Data sourced from FactSet Data Systems
