US stocks rose on Monday, with the Nasdaq Composite nearing its record close, after the S&P 500 finally closed above the 5,000 mark at the end of last week and as investors awaited inflation data due this week.
What is happening
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The Dow Jones Industrial Average rose 180 points, or 0.4%, to 38,841.
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The S&P 500 SPX rose 0.7 points, or less than 0.1%, to 5,027.
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The Nasdaq Composite Index fell 40 points, or 0.2%, to 15,955, about 0.6% below its record close of 16,057.44 recorded on November 19, 2021.
The S&P 500 rose 1.4% last week, and on Friday finished above the 5,000 threshold for the first time. The Dow Jones index achieved weekly gains of less than 0.1%, while the Nasdaq index jumped 2.3%.
be seen: The S&P 500 hits 5,000 for the first time. Here's what it means for the market.
Market driving factors
The market is seeing “a bit of profit-taking” on Monday, according to James Ragan, director of wealth research at DA Davidson.
The speed and scope of the stock market's rise, with the S&P 500 up more than 7% over five weeks, is making some traders nervous.
“Most people will be focused on the inflation numbers this week, but there is also a potential conflict between how far the current market rally extends versus the hype surrounding the S&P 500 crossing 5,000 points,” said Chris Larkin, managing director of trading. And investing in e-commerce from Morgan Stanley.
“While it is true that the S&P has often risen after crossing 'round number' thresholds like these, it has not always done so after the kind of rally that has occurred since late October,” he said in email comments.
Larkin noted that since 1968, whenever the S&P has risen by at least 20% during a 70-day trading period, as it did between Oct. 27 and last Thursday, “more often than not it has been lower two weeks later.”
Earnings so far are better than expected, while economic data remains strong, which is positive for US stocks, Rajan said in a phone interview.
Analysts at Jefferies said that after two-thirds of the fourth-quarter earnings season, 76% of companies beat their final estimates.
“Although we spend a lot of time thinking, analyzing, and charting indicators of sentiment, flows, performance, and economic health, the reality is that earnings revisions actually do the best job of determining which direction stocks are likely to go. This brings us to the bottom line,” said Andrew Greenbaum, senior vice president. “Fundamentals, more than anything else, are probably what is perpetuating the rally that began late last year,” Jefferies Equity Product Management said.
Extra Market: Stocks were moving much more than usual after earnings. Here's why, and what it could mean.
The release of CPI data on Tuesday could derail these fundamentals.
See also: The first big inflation report will be released for 2024. Here's what the CPI is likely to show.
“the [Federal Reserve] “It continues to look to interest rate cuts to offset the expected tightening of financial conditions as inflation returns to 2%, but the timing and magnitude remain elusive given the strength of the economy and continued uncertainty about the path of inflation,” Fed Chairman Tim Dowie said. American economist at SGH Macro Advisors.
is reading: What investors saving $6.5 trillion in cash should do as Fed dials back interest rate cut expectations
Companies in focus
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Diamondback Energy Company
fang,
+9.33%
Closely held Endeavor Energy Resources LP on Monday confirmed reports that they are combining in a deal worth about $26 billion including debt, marking the latest major oil merger. Diamondback shares rose 9%. -
shares Big lot company
big,
-29.70%
Loop Capital stock fell 30% after Loop Capital warned investors to stay away from the discount home supplies retailer, citing a “precarious” financial situation and loss of relevance to consumers. -
shares AbbVie company
IBPV,
-0.55%
It fell 0.4% after the biotechnology company lowered its first-quarter guidance to reflect the diluting impact of its closing of the ImmunoGen acquisition. -
Rivian Automotive Company raven shares,
-2.37%
It decreased by 2.2%. A Barclays analyst downgraded the stock to equal weight from overweight in a Monday note to clients, while lowering his price target to $16 from $25 and warning that the electric car maker's “leading technology” may not be enough to withstand an environment filled with… With challenges.
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Steve Goldstein contributed.
