Michael M. Santiago
U.S. stocks on Monday inched up, though moves were small as Wall Street comes off a historic week that saw its benchmark S&P 500 (SP500) index achieve some major milestones. Traders geared up for a week that will feature some key economic data and a slew of Federal Reserve speakers.
The Nasdaq Composite (COMP.IND) advanced 0.43% to 16,059.43 points in mid-day trade. The tech-heavy gauge is on watch as it could set a new record closing high, which would come over two years after it previously set that mark at 16,057.44 points on November 19, 2021.
The blue-chip Dow (DJI) added 0.54% to 38,881.30 points. The S&P (SP500) climbed 0.38% to 5,045.50 points, after having crossed and closed above the 5,000 points mark for the first time ever last week.
All 11 S&P sectors were in the green, with the exception of Health Care.
Equities have been on a tear after starting off the year on shaky ground, largely due to an advance in technology stocks. The “Magnificent 7” club in particular has seen tremendous gains, and grabbed some headlines on Monday as well after chip giant Nvidia (NVDA) briefly overtook tech and retail behemoth Amazon (AMZN) in terms of market value to become the fourth biggest publicly listed U.S. firm.
Tuesday’s consumer price index (CPI) report will be closely watched, as market participants try to assess when the Fed will finally start cutting interest rates. Thursday’s retail sales data will also be an indicator of the economy’s strength and the health of consumer spending.
“We expect that seasonal adjustment factors—which may have flattered December retail sales—will present a headwind to January retail sales, and we look for total sales to slip 0.9% and sales in the important control category to be flat,” JPMorgan’s Michael Feroli said on Friday.
“For the CPI we expect declining energy prices will limit the headline figure to just a 0.1% increase, which would take the year-ago gain down to 2.9% from 3.4% in December. We also look for a high-side 0.2% increase in the ex-food and energy core measure, held down by an expected decline in used vehicle prices,” Feroli added.
Monday’s economic calendar was light, but the one indicator that did come in was a favorable one. According to the New York Fed’s survey of consumer expectations for January, three-year ahead inflation expectations returned to their lowest levels seen before the COVID-19 pandemic.
Treasury yields, like stocks, made small moves to kick-off the week. The longer-end 30-year yield (US30Y) was little changed at 4.38%, while the 10-year yield (US10Y) was down 1 basis point to 4.18%. The shorter-end more rate-sensitive 2-year yield (US2Y) was also down 1 basis point to 4.47%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Today also lived up to its moniker of “merger Monday,” with two notable deal announcements. Diamondback Energy (FANG) agreed to merge with Endeavor Energy Resources, the largest privately-held oil and gas company in the Permian Basin, in a deal valued at about $26B. Diamondback (FANG) stock surged more than 10% and was the top percentage gainer on the S&P 500 (SP500).
Additionally, Gilead Sciences (GILD) said it would acquire CymaBay Therapeutics (CBAY) for a total equity value of $4.3B, sending the latter’s shares soaring 25%.
The fourth quarter earnings season will continue to be in focus this week, though the volume of companies reporting will begin to slow down. Also grabbing some attention will be 13F filings – regulatory disclosures by major funds of their quarterly equity ownership changes.