© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 2, 2023. REUTERS/Brendan McDermid
By Sinéad Carew and Bansari Mayur Kamdar
(Reuters) – It closed slightly higher on Monday, giving up most of its earlier gains, as investors turned cautious ahead of testimony this week from Federal Reserve Chairman Jerome Powell and the jobs report from USA
Earlier in the session, the indices looked much stronger with the Nasdaq gaining over 1% before closing lower. The biggest boost came from iPhone maker Apple Inc (NASDAQ:) after Goldman Sachs (NYSE:) initiated coverage with a “buy” rating.
But stocks gave back earlier gains as US yields and 2-year Treasury yields rebounded from early declines after data showed new orders for US-made goods fell. less than expected in January.
Rising bond yields tend to weigh on stock valuations, particularly growth and technology stocks, as higher rates reduce the value of future cash flows.
“The market is in a holding pattern because this week will be key to shed light on what’s going on with the US economy,” said Irene Tunkel, chief US equity strategist for
BCA Research in New York, which plans to closely monitor the US Nonfarm Payrolls report for February, due on Friday.
“People are concerned about the job numbers and the economic data because they are concerned about what the Fed will do. Ultimately, all roads lead to the Fed.”
And with possible Fed rate hikes his main concern, Monday’s data had already dampened investor enthusiasm, said Shawn Cruz, chief trading strategist at TD Ameritrade in Chicago.
“The market pullback was because there is still a lot of work to be done on inflation,” Cruz said. “We’re not seeing the kind of slowdown in demand that we need to see. The primary goal of the Fed rate hike is to slow down the economy.”
The rose 40.47 points, or 0.12%, to 33,431.44; the S&P 500 gained 2.78 points, or 0.07%, to 4,048.42; and fell 13.27 points, or 0.11%, to 11,675.74.
Among the S&P’s 11 major industry sectors, six ended the day higher. The commodity-related materials sector fell the most, down 1.7%, after China set a lower-than-expected economic growth target for this year of around 5%.
The technology sector gained the most, with the biggest boost coming from Apple, which closed up 1.9%. Other strong impulses came from microsoft corporation (NASDAQ:), which added 0.6%, and Google parent Alphabet (NASDAQ:) Inc, which added 1.6%.
All three major US stock indexes had risen on Friday, posting weekly gains after comments from Fed policymakers eased jitters about aggressive rate hikes.
But Federal Reserve Bank of San Francisco President Mary Daly said Saturday that if inflation and labor market data continue to turn out better than expected, interest rates would have to rise and stay there longer than expected. that the Fed authorities had projected in December.
Investors will be looking for clues about the Fed’s future rate hike trajectory when Powell testifies before Congress on Tuesday and Wednesday. Since Powell last spoke, strong economic data and higher-than-expected inflation have raised concerns that the Fed will raise rates more than expected or keep them higher for longer.
Traders expect at least three more 25 basis point hikes this year and expect interest rates to peak at 5.44% in September from 4.67% today.
Shares of cryptocurrency-related companies were volatile after Silvergate Capital (NYSE:) Corp pulled the plug on its crypto payment network, raising questions about the company’s ability to stay in business. Shares of Silvergate closed down 6.2% while its crypto bank peers signature bank (NASDAQ:) fell 2.5%.
Down issues outnumbered those up on the New York Stock Exchange by a ratio of 1.69 to 1; on Nasdaq, a 1.94-to-1 ratio favored decliners.
The S&P 500 posted 20 new 52-week highs and one new low; the Nasdaq Composite posted 85 new highs and 92 new lows.
On US exchanges, 10.57 billion shares changed hands compared with the 10.98 billion moving average of the last 20 sessions.