Wall Street closed higher on Monday, fueled by surging technology stocks as investors began an earnings-heavy week with a renewed enthusiasm for market-leading momentum stocks that were battered last year. All three major stock indexes extended Friday’s gains, with the tech-heavy Nasdaq leading the pack, boosted by semiconductor shares.
The Philadelphia SE semiconductor index jumped 5.0%, its biggest one-day gain since Nov. 30 after Barclays upgraded the sector to “overweight” from “equal weight.” Tesla surged 7.7 % after Chief Executive Elon Musk took the stand in his fraud trial related to a tweet saying he had backing to take the electric automaker private. Baker Hughes missed quarterly profit estimates due to inflation pressures and ongoing disruptions due to Russia’s war on Ukraine. The oilfield services company’s shares dipped 1.5 %. Cloud-based software firm Salesforce jumped 3.1 % following news that activist investor Elliot Management Corp has taken a multi-billiondollar stake in the company. Spotify Technology joined the growing list of tech-related companies to announce impending job cuts , shedding 6% of its workforce as rising interest rates and the looming possibility of recession continue to pressure growth stocks. The music streaming company’s shares rose 2.1 %.
Of the 11 major S&P 500 sectors, all but energy ended green, with tech shares enjoying the largest percentage gain, up 2.3% on the session.. The Dow Jones Industrial Average rose 254.07 points, or 0.76%, to 33,629.56, the S&P 500 gained 47.2 points, or 1.19%, to 4,019.81 and the Nasdaq Composite added 223.98 points, or 2.01%, to 11,364.41. This week, Microsoft and Tesla, along with a spate of heavy-hitting industrials including Boeing, 3M Co, Union Pacific Corp, Dow Inc., and Northrop Grumman Corp, are expected to post quarterly results.
The dollar slipped against the euro on Monday, at one point hitting a fresh 9-month low, as the common currency found support from European Central Bank officials’ comments signalling additional jumbo interest rate rises in Europe. The euro reached as high as $1.0927, to trade at its highest level since April last year, before paring gains to trade up 0.05% at $1.08605. The euro’s early gains were aided by comments from European Central Bank (ECB) governing council members Klaas Knot and Peter Kazimir, who both advocated for two more 50 basis point hikes at meetings in February and March. The dollar, which has risen against the yen after the Bank of Japan (BOJ) defied market pressure to reverse its ultra-easy bond control policy last week, was up 0.83% at 130.67 yen, following last week’s wild gyrations between 127.22 and 131.58.
U.S. Treasury yields kept creeping up on Monday, further eroding a recent bond rally that some investors think was overdone in reflecting fears that the U.S. economy may soon enter a recession. U.S. bond yields dropped to four-month lows on Thursday last week on expectations that the Federal Reserve, which will hold its next rate-setting meeting on Jan. 31-Feb. 1, will be forced to pivot to a more dovish policy if the U.S. economy shrinks this year, as many fear. But yields – which move inversely to prices – started rising on Friday, and on Monday they kept climbing, with the benchmark 10-year Treasury yield and two-year yields up about four and five basis points, respectively, to 3.524% and 4.238%.
