The S&P 500 declined 1.0% on Monday in a slight reversal from last week's rally, while relative strength in the technology stocks helped lift the Nasdaq Composite (+0.5%). The Dow Jones Industrial Average fell 1.4%, and the Russell 2000 fell 2.8%.
There wasn't much conviction in today's session ahead of the Q1 earnings reports from the leading U.S banks this week. Perhaps some skittishness regarding the loan-loss reserves these banks are accruing contributed to the influential drag from the S&P 500 financials sector (-3.6%).
Sellers were kept in check, though, as stocks drifted sideways for most of the session and closed well off intraday lows after a brief tumble after the open. The S&P 500 real estate sector (-4.6%) declined the most, while the consumer discretionary sector (+1.1%) finished comfortably in positive territory.
Interestingly, a multinational agreement to cut oil production was unable to stir much enthusiasm within the energy sector (-0.4%). Specifically, OPEC and other non-OPEC members agreed to cut production by 9.7 mb/d from May 1-June 30, then 7.7 mb/d from July 1-Dec. 31, and then 5.8 mb/d from Jan. 1, 2021-April 30, 2022.
WTI crude futures struggled for direction and ultimately settled the session down 2.0%, or $0.45, to $22.42/bbl, suggesting that investors were not convinced that the production cuts alone would save an industry still facing demand problems caused by COVID-19. The economy is expected to gradually reopen in May, but the speed and scope of a recovery remained uncertain.
Investors' appetite for growth, meanwhile, continued to lead buyers toward technology companies, including Amazon (AMZN 2168.87, +126.11, +6.2%), Apple (AAPL 273.25, +5.26, +2.0%), and Netflix (NFLX 396.72, +26.00, +7.0%). Amazon stepped up efforts to meet strong customer demand, while Netflix benefited from a positive note in Barron's.
Separately, shares of Caterpillar (CAT 114.14, -10.89, -8.7%) dropped nearly 9% after the stock was downgraded to Underperform from Neutral at Bank of America/Merrill Lynch.
U.S. Treasuries ended the quiet session on a lower note. The 2-yr yield increased one basis point to 0.23%, and the 10-yr yield increased two basis points to 0.75%. The U.S. Dollar Index declined 0.1% to 99.42.
Investors did not receive any economic data on Monday. Looking ahead, investors will receive Import and Export Prices for March on Tuesday.
- Nasdaq Composite -8.7% YTD
- S&P 500 -14.5% YTD
- Dow Jones Industrial Average -18.0% YTD
- Russell 2000 -27.4% YTD
Closing Stock Market Summary