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All three major indexes were climbing Monday afternoon in a bid to close out the final trading session of the most brutal month in years for bullish investors on a high note.
The Nasdaq Composite was on its way to logging its worst January ever, despite gains in the early part of Monday’s session.
What’s happening
- The Nasdaq Composite Index COMP picked up 318 points, or 2.3%, to trade around 14,088.
-
The Dow Jones Industrial Average
DJIA,
+0.73%
was up 132 points, or 0.4%, at 34,857. -
The S&P 500 index
SPX,
+1.33%
was trading 47 points, or 1.1%, higher at 4,479, buoyed by gains in consumer discretionary
SP500.25,
+2.97%
and information technology
SP500.45,
+1.55%
shares. - For the month, the Dow is headed for a 4.1% decline, the S&P 500 is looking at a 6% drop thus far in the month and the Nasdaq Composite was on track for a 10% drop, which would mark its worst January loss on record, if the decline holds.
As of Friday’s close, the Dow and S&P 500 had each booked their biggest one-month point and percentage declines since 2020. Meanwhile, the Nasdaq had its largest one-month percentage decline since October 2008 and biggest monthly point decline ever.
What’s driving markets
Stocks were trying to push higher on Monday but with the Nasdaq Composite still poised for a double-digit monthly drop, which would represent its worst January on record.
Speculation about the direction of Federal Reserve interest rates has played a key part in driving market moves and is likely to continue to be a factor for trading in the six weeks leading up to the Fed’s crucial March gathering, when policy makers are expected to usher in the first rate-hike cycle since 2015-2018.
Investors are also fearful about what a weak downturn in January means for returns for the remainder of the year, based on seasonal trends.
“There’s a lot of chatter about whether a down January portends a down year, but as we narrow in on February—taking a more granular look at historical trends shows that larger-than-average January declines were followed by more weakness than strength in February,” wrote Chris Larkin, managing director at E-Trade from Morgan Stanley in a Monday note.
The president of the Atlanta Fed, Raphael Bostic, told the Financial Times that the central bank could lift rates in increments of 0.50 percentage point, rather than the usual quarter point, if inflation proves stubborn, though he is sticking with his call for three quarter-point hikes for all of 2022.
“If markets were looking for reassurance from the Federal Reserve last week about the pace of policy tightening, they didn’t get it, with [Chair Jerome] Powell insisting that all Fed policy options were open for March and beyond. While this seems entirely sensible, it wasn’t the message increasingly nervous markets wanted to hear,” said Michael Hewson, chief market analyst at CMC Markets UK.
Earnings season ramps up this week. Strategists at Goldman Sachs say of the S&P 500 companies that have reported, 52% have offered guidance above analyst expectations after most fourth-quarter results trumped expectations.
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Which companies are in focus?
-
Moderna stock
MRNA,
+5.14%
rallied 3.6% on Monday as the U.S. Food and Drug Administration granted full approval of its COVID-19 vaccine. - Tesla TSLA shares rose 8.4% after Credit Suisse analyst Dan Levy upgraded the electric vehicle maker to outperform from neutral. The analyst argued Tesla was caught in the market decline but has robust fundamentals.
-
Shares of Spotify
SPOT,
+12.26%
were up 12% after it said on Sunday that it would add content advisories to certain podcasts and improve transparency about its misinformation policy. Last week, rock icon Neil Young pulled his music from Spotify, citing the spread of disinformation on the streaming-music platform, specifically on Joe Rogan’s popular podcast. -
Citrix Systems
CTXS,
-3.70% ,
the cloud computing company, confirmed Monday it would be purchased for $16.5 billion, including debt, by Elliott Management and Vista Equity Partners. Citrix shares were down 3.8%. -
Shares of Robinhood Markets Inc.
HOOD,
+9.98%
were up 12% after it was revealed that Cathie Wood’s ARK Investment suite of funds purchased nearly 2.45 million shares of the beaten-down online brokerage on Friday.
How are other assets trading?
- The yield on the 10-year Treasury note TMUBMUSD10Y rose 1 basis points to around 1.79%. Yields and debt prices move opposite each other.
- The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.5%.
- Oil futures CL. 1 rose 62 cents, or 0.7%, to $87.44 a barrel on the New York Mercantile Exchange. Gold futures GC00 rose 0.6%, or $10.20, to reach $1,796.80 an ounce.
- Bitcoin BTCUSD was trading up 1.6% at $38,349.
- In European equities, the Stoxx Europe 600 SXXP closed up by 0.7%, while London’s FTSE 100 UKX finished marginally lower on the day.
- The Hang Seng Index HSI and Japan’s Nikkei 225 NIK each finished 1.1% higher. Markets in China and in other parts of Asia are closed for Lunar New Year.
— Steve Goldstein contributed to this article
