Month: March 2023

(C) Reuters

By Yasin Ebrahim

Investing.com — The S&P 500 rallied Friday, to remain on course to wrap up a strong first quarter of gains, led by growth stocks including tech as signs of cooling but still-elevated inflation pushed Treasury yields lower.

The S&P 500 rose 1%, the Dow Jones Industrial Average added 0.8%, or 273 points, and the Nasdaq gained 1.3%, and it’s set for a nearly 20% gain for Q1.

The core personal consumption expenditures price index, which excludes food and energy and is the Fed’s preferred inflation gauge, increased 0.3% in February just below the 0.4% expected.

A deeper dive into the data, meanwhile, showed the core services ex-rent component increased 0.27% in February, the “best since an out-of-the-blue dip in July last year,” Pantheon Macroeconomics said.

The U.S. 10-year Treasury yield fell five basis points to 3.51%, helping growth sectors of the market, though it is expected to remain range bound.

“The 10-year TSY yield remains stuck in a broad trading range,” Janney Montgomery Scott said. “Continue to watch 3.30% as support on the 10-year; initial resistance remains at 3.60%, then closer to 4% in our view,” it added.

Tesla (NASDAQ:TSLA) was the biggest gainer among consumer stocks, rising more than 5% followed by CarMax (NYSE:KMX) and Caesars Entertainment Corporation (NASDAQ:CZR).

Tech, which is on track for a 20% rise in Q1, was lifted by a rise in Alphabet (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL), while semiconductor stocks also underpinned the broader move higher.

NVIDIA Corporation (NASDAQ:NVDA) rose more than 1% adding to the swashbuckling 89% gain seen in the quarter, with the chipmaker riding high on the coattails of a strong interest in generative AI that is expected to boost its chip demand.

On the earnings front, BlackBerry’s (NYSE:BB) narrower than expected loss overshadowed revenue that missed Wall Street estimates, sending the share price more than 15% higher.

ELF Beauty (NYSE:ELF) jumped more than 3% after Morgan Stanley upgraded its price target on the cosmetic company to $94 from $75, citing favorable Q1 sales data.

In other news, Virgin Orbit Holdings Inc (NASDAQ:VORB) sank 40% as it announced it would be shutting down operations and cutting about 90% of staff after attempts to secure funding failed.

The strong quarterly gains for the broader market come even as investors had to contend with turmoil in banks that has subsided somewhat after the Federal Reserve and U.S. government stepped up to support the industry.

(C) Reuters.

By Yasin Ebrahim

Investing.com — The Dow closed higher Friday, notching a monthly gain, led by growth stocks including tech as signs of cooling but still-elevated inflation pushed Treasury yields lower.

The Dow Jones Industrial Average added 1.26%, or 415 points, to end the month up 1.9% but end the quarter just above flat. The Nasdaq gained 1.3% to end Q1 up nearly 20%. The S&P 500 rose 1.4%.

The core personal consumption expenditures price index, which excludes food and energy and is the Fed’s preferred inflation gauge, increased 0.3% in February just below the 0.4% expected.

A deeper dive into the data, meanwhile, showed the core services ex-rent component increased 0.27% in February, the “best since an out-of-the-blue dip in July last year,” Pantheon Macroeconomics said.

The U.S. 10-year Treasury yield fell five basis points to 3.51%, helping growth sectors of the market, though it is expected to remain range bound.

“The 10-year TSY yield remains stuck in a broad trading range,” Janney Montgomery Scott said. “Continue to watch 3.30% as support on the 10-year; initial resistance remains at 3.60%, then closer to 4% in our view,” it added.

Tesla (NASDAQ:TSLA) was the biggest gainer among consumer stocks, rising more than 6% followed by CarMax (NYSE:KMX) and Caesars Entertainment Corporation (NASDAQ:CZR).

Tech, which is on track for a 20% rise in Q1, was lifted by a rise in Alphabet (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL), while semiconductor stocks also underpinned the broader move higher.

NVIDIA Corporation (NASDAQ:NVDA) rose more than 1% adding to the swashbuckling 89% gain seen in the quarter, with the chipmaker riding high on the coattails of a strong interest in generative AI that is expected to boost its chip demand.

On the earnings front, BlackBerry’s (NYSE:BB) narrower than expected loss overshadowed revenue that missed Wall Street estimates, sending the share price more than 14% higher.

ELF Beauty (NYSE:ELF) jumped more than 4% after Morgan Stanley upgraded its price target on the cosmetic company to $94 from $75, citing favorable Q1 sales data.

In other news, Virgin Orbit Holdings Inc (NASDAQ:VORB) sank 41% as it announced it would be shutting down operations and cutting about 90% of staff after attempts to secure funding failed.

The relative underperformance in the Dow Jones Industrial Average for the quarter followed pressure from regional stocks following the collapse of SVB and Signature that led to a 25% drop in the banking sector.

Despite the broader market gains, some warn that equity valuations are still historically high at a time when bonds offer attractive returns.

With the market trading at 21 times earnings, which is “historically high, you would expect the scenario would be indicative to justify that kind of valuation but you don’t have any of that,” Sean O’Hara, president of Pacer ETFs, told Investing.com’s Yasin Ebrahim in an interview on Friday. “The Fed is non-accommodative, inflation is still a challenge, there is banking liquidity crisis, and a potential recession coming as well as earnings revisions to the downside.”

“But the biggest difference is that investors can park their money now in [Treasuries] and make 5% without any risk,” O’Hara added.

(C) Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 30, 2023. REUTERS/Brendan McDermid

By Caroline Valetkevitch

NEW YORK (Reuters) – Wall Street rallied more than 1% on Friday and the Nasdaq notched its biggest quarterly percentage gain since June 2020, as signs of cooling inflation bolstered hopes the Federal Reserve might soon end its aggressive interest rate hikes.

The S&P 500 closed at its highest level since Feb. 15 and posted a second straight quarter of gains, led by the technology sector’s 21.5% rise in the first quarter.

The quarterly gains came despite a sharp sell-off in bank stocks following the collapse of two regional banks earlier this month and worries about a potential bigger financial crisis.

The S&P 500 financial sector was the quarter’s worst-performing sector, posting a 6.1% drop, while the KBW regional bank index fell 18.6% for the period.

The Commerce Department report Friday showed U.S. consumer spending rose moderately in February while inflation cooled.

“The equity market seems to be delighted with the slight tick lower in inflation, as it should be. It underscores that the Fed’s campaign is, in fact, working, albeit slowly,” said Quincy Krosby, chief global strategist at LPL Financial (NASDAQ:LPLA) in Charlotte, North Carolina.

The Fed has been raising rates to cool inflation. Expectations for a 25 basis point rate hike at its May meeting dipped to about 50%, with no hike seen to be just as likely.

The Dow Jones Industrial Average rose 415.12 points, or 1.26%, to 33,274.15, the S&P 500 gained 58.48 points, or 1.44%, to 4,109.31 and the Nasdaq Composite added 208.44 points, or 1.74%, to 12,221.91.

For the week and month, stocks also posted strong gains. The Nasdaq was up 6.7% for March.

For the quarter, the Nasdaq jumped 16.8% in its biggest quarterly percentage increase since the three months ended June 2020. The S&P 500 gained 7% and the Dow rose 0.4% in the quarter, based on the latest available data.

S&P 500 sectoral performance in Q1, https://www.reuters.com/graphics/STOCKS-QUARTER/egpbyjdlwvq/chart.png

Semiconductors were among the quarter’s strongest performing stocks, with the Philadelphia semiconductor index rising 27.6%.

Shares of big tech gained as investors rotated out of banks and as U.S. Treasury yields eased, with the two-year note yield posting on Friday its largest monthly drop since 2008. Higher yields tend to be a negative for big tech companies.

Apple Inc (NASDAQ:AAPL) shares ended up 1.6% on Friday, rising along with other megacaps. It also won its appeal against the decision by Britain’s antitrust regulator to launch an investigation into its mobile browser and cloud gaming services.

Also on Friday, Boston Fed President Susan Collins said that wherever the U.S. central bank stops with its rate rises, maintaining that level for some time will be critical in helping to lower high inflation back to the 2% target.

Volume on U.S. exchanges was 11.98 billion shares, compared with the 12.74 billion full-session average over the last 20 trading days.

Advancing issues outnumbered decliners on the NYSE by a 4.78-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favored advancers.

The S&P 500 posted 19 new 52-week highs and no new lows; the Nasdaq Composite recorded 81 new highs and 131 new lows.