Tech Sector Powers S&P 500 To 10-Month High While Oil Stocks Struggle: What's Driving Markets Today

Stocks kicked off the week on a positive note, ahead of key macro events in the upcoming days, including the May inflation rate figure on Tuesday and the Federal Reserve's monetary policy decision on Wednesday.

The S&P 500 Index, closely monitored by the SPDR S&P 500 ETF Trust (ARCA: SPY), reached its August 2022 highs at 4,320 points and is on track to reach 10-month highs by the end of today's session.

While large tech companies continue to drive the overall stock market higher, oil stocks are struggling due to a significant drop in crude oil prices. Investors remain confident that the Fed will keep interest rates unchanged, delivering a pause to the previous 15-month hiking cycle, with a 75% probability priced by the latest CME Group FedWatch tool.

Chart Of The Day: S&P 500 Index Approached August 2022's Highs

Cues From Monday's Trading:

The Nasdaq 100 continues to outperform other major U.S. averages, up 0.8% on the day, reflecting the tech-sector dominance.

The S&P 500 was up 0.4%, while the Dow Jones rose by 0.3%. Small caps were also quite upbeat, with the Russell 2000 Index up 0.8%. 

U.S. Indices’ Performance on Monday

Analyst Color:

LPL Financial chief technical strategist Adam Turnquist weighed in on the recent market rally. The S&P 500's entry into a new bull market suggests the Oct. 12 low can now be labeled as a bear market low, the analyst said.

Turnquist noted that it took 165 trading days for the index to surpass the 20% threshold of the bear market low, marking the second-longest period to confirm a new bull market in nearly 75 years.

The LPL analyst sees more gains ahead. Drawing on historical forward after the commencement of a bull market, he noted that the average and median return 12 months after a bull market officially starts were 18-19%.

Monday's Trading In Major US Equity ETFs: In midday trading on Monday, the SPDR S&P 500 ETF Trust was 0.34% higher to $431.39, the SPDR Dow Jones Industrial Average ETF (ARCA: DIA) rose 0.3% to $340.18 and the Invesco QQQ Trust (NASDAQ: QQQ) was 0.78% higher to $357.27, according to Benzinga Pro data.

The Technology Select Sector SPDR Fund (ARCA: XLK) rose 1.3%, followed by the Consumer Discretionary Select Sector SPDR Fund (ARCA: XLY), up 1.1%, and the Communication Services Select Sector SPDR Fund (ARCA: XLC), up 0.5%. 

The Energy Select Sector SPDR Fund (ARCA: XLE) was the daily worst performer, down 1.1%.

Latest Economic Data:

The Federal Reserve of New York revealed the consumer inflation expectations survey for May, showing that year-ahead expectations fell to 4.1% in May 2023, the lowest since March 2021, down from 4.4% in April.

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Stocks In Focus:

Carnival Corp. (NYSE: CCL) rose 14% on the day, after both JPMorgan and Bank of America upgraded the company and raised the price targets. 

Airbnb, Inc. (NASDAQ: ABNB) rose 5%, after France's finance ministry announced that it is working on plans to close a tax loophole benefiting short-term furnished rentals.

Sofi Technologies, Inc. (NASDAQ: SOFI) rose nearly 10% after Truist Securities analysts led by Andrew Jeffrey lifted their price target from $8 to $11. 

Nasdaq, Inc. (NASDAQ: NDAQ) fell 12%, as the company said it would pay $10.5 billion in cash and stock to acquire financial software developer Adenza from Thoma Bravo, making this the largest acquisition for Nasdaq.

• Chinook Therapeutics, Inc. (NASDAQ:KDNY) skyrocketed over 58% after Novartis AG (NYSE:NVS) announced a deal to buy the biotech for $40 per share in cash.
• Illumina, Inc. (NASDAQ:ILMN) rose over 3.5% after its CEO Francis de Souza quit following a proxy battle with Carl Icahn over its strategic direction.
• Oracle Corp. (NASDAQ:ORCL) is due to report its quarterly results after the market close. Wolfe Research upgraded the stock from Peer Perform to Outperform with a $130 price target.

Commodities, Bonds, Other Global Equity Markets:

Crude oil plunged 3.9%, with a barrel of WTI-grade crude falling to $67.56. The United States Oil Fund ETF (ARCA: USO) was 3.8% lower to $60.6 per share.  

Treasury yields were unchanged in the short and belly part of the curve, with the 10-year yield flat at 3.79% and the two-year yield flat at 4.60%. The 30-year yield rose 5 basis points to 3.93%, pushing the iShares 20+ Year Treasury Bond ETF (ARCA: TLT) 0.6% lower for the day. 

The dollar strengthened, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (ARCA: UUP), up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust (ARCA: FXE), was flat at 1.0750.

European equity indices rose across the board. The SPDR DJ Euro STOXX 50 Etf  (ARCA: FEZ) rose 0.9%. 

Gold fell 0.4% to $1,954/oz. The SPDR Gold Trust (ARCA: GLD) was 0.3% lower to $181.50. Silver dipped 1.3% to $23.96, with the iShares Silver Trust (ARCA: SLV) down 1.2% to $22 per share. Bitcoin (CRYPTO: BTC) fell 0.4% to $25,825.

Staff writer Piero Cingari updated this report midday Monday. 

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