The S&P 500 fell Monday as the market struggled to rebound from a relentless sell-off that’s punished tech stocks and pushed the broader market index to the brink of a bear market.
The Dow Jones Industrial Average gained 107 points, or 0.3%. The S&P 500 fell 0.1% after the benchmark nearly fell into a bear market last week before a Friday rebound. The Nasdaq Composite was down 1.1%.
“We continue to be transitioning through this interest rate driven repricing,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “So as the U.S. Treasury yield curve has continued to move higher in anticipation of both higher realized inflation and Federal Reserve policy adjustment, we’ve seen a consistent and broad adjustment to asset valuations that has occurred consistent with those rising inflation concerns.”
Major tech names continued to take a hit on Monday. Shares of Apple, which fell into a bear market at one point last week, fell 1%. Tesla shares dropped 5%. Shares of Google-parent Alphabet declined 1.6%.
Other sectors including financials and consumer discretionary were also down at least 1%. Some of the biggest decliners on the Dow included American Express, Salesforce and Walt Disney — each of which dropped 1.5%, 1.6% and 1.3%, respectively.
After a long spate of selling, markets rebounded on Friday, with the Dow rising 466.36 points and the S&P 500 climbing 2.39%. The Nasdaq Composite jumped 3.82% and posted its strongest one-day gain since November 2020.
But major averages still posted steep losses for the week and are undergoing an intense sell-off as the Federal Reserve attempts to tamp down inflation with aggressive rate hikes. The Dow’s seven-week losing streak is its worst since 2001. The S&P 500 just posted its first six-week losing streak since June 2011.
The S&P 500 sits 16% off its record high, while the Nasdaq Composite is down more than 27%.
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Some analysts believe those declines may soon point to an attractive entry point for the broader market index, based on a long-term perspective.
“The S&P 500 is quickly approaching a level that, historically, has indicated that future growth concerns are priced in,” Citi analyst Scott Chronert wrote in a note.
Some notable outperformers on Monday included healthcare stocks. Shares of Eli Lilly surged 4% after Mounjaro was approved by the Food and Drug Administration to treat Type 2 diabetes. The drug is also being investigated for potential use in the treatment of obesity and overweight. Pfizer’s stock price jumped 1.4%, AbbVie’s stock price was up 1.3%.
Energy stocks also made gains, climbing higher on the back of rising oil prices. Exxon Mobil’s stock price surged 3%, Chevron’s surged 3.5% and ConocoPhillips’ rose nearly 3.6%.
Elsewhere, shares of Spirit Airlines jumped 12% after JetBlue announced a tender offer to acquire the airline for $30 a share. Carvana’s stock price rose 5% after the used car company issued expectations of significant core earnings in 2023, and outlined a plan to cut costs.
Strategists at RBC Capital Markets said in a Monday note that the S&P 500 is at a crossroads as it struggles to find a bottom. If the broad market index holds at 3,850 – a figure close to the intraday record the S&P 500 nearly breached last week – strategists believe stocks are pricing in a recession to match the late 2018 drawdown.
“The S&P 500 is still trading as though it’s experiencing a growth scare, a framework that has been pointing to downside in the S&P 500 to ~3,850,” RBC Capital Markets strategist Lori Calvasina wrote. “Current trends in economic forecasts continue to support the idea that this is the right way to think about how far stocks should fall, though we remain mindful that could change.”
Retail earnings season kicks off this week with several big-box retailers set to report results for the first quarter, including Walmart, Target and Home Depot. Elsewhere, a handful of technology companies is also on deck.
Investors will also have their eye on retail sales data this week, which could give them insight into how retailers are managing inflation, which remains near 40-year highs.
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