A rally in energy stocks lifted the S&P 500 for third straight gain, with the index briefly rising 20% above its October closing low.
Crude futures advanced 2.5%, as Saudi Arabia announced it will make an extra 1 million barrel-a-day supply cut in July, taking its production to the lowest level for several years. Chevron Corp. and Exxon Mobil Corp. were higher.
Meanwhile, Apple Inc. added 1.0%, on track for an all-time closing high. The company is expected to launch a mixed-reality headset at the Worldwide Developers Conference on Monday, marking its most significant product launch in nearly a decade.
Treasury yields rose across the curve, while the dollar strengthened against all its Group-of-10 peers. There’s increasing speculation that the Federal Reserve plans to keep interest rates steady in June, but keep options open for later hikes. Reports on US services and factory orders due later Monday may provide further clues on the health of the economy.
“Friday’s jobs data seemed to put the nail in the coffin on rate hike fears,” wrote Peter Tchir, head of macro strategy at Academy Securities. “The market has decided (rightfully so) that we are almost done with rate hikes and unless we get disastrous inflation data, any future hikes will be too small to act as a headwind.”
Bets of a pause in Fed rate hikes, along with a Big Tech rally spurred by optimism about artificial intelligence, have put stocks on the verge of a bull market. The S&P 500 briefly rose 20% from its October closing low Monday, while the Cboe Volatility Index was slightly higher after falling to the lowest since February 2020 last week.
Saira Malik, chief investment officer at Nuveen, said she still foresees a mild US recession, but sometime in 2024 as the “growth-dampening effects of tight monetary policy work their way through the economy.”
“In the meantime, with high inflation likely to persist, we think investors would be well-served by allocating to real assets that can provide meaningful inflation protection,” she said, pointing to farmland.
Elsewhere, equities in Europe drifted while those in Asia were mostly higher. The Nikkei 225 rose 2.2% on Monday to its highest level since July 1990 as investors bet that the weak yen will boost corporate profits.
Key events this week:
- US factory orders, ISM services, Monday
- ECB President Christine Lagarde appears in European Parliament, Monday
- Rate decisions in Australia, Poland, Tuesday
- China forex reserves, trade, Wednesday
- US trade, consumer credit, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventory data, Wednesday
- Eurozone GDP, Thursday
- Rate decisions in India, Peru, Thursday
- Japan GDP, Thursday
- US wholesale inventories, initial jobless claims, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 was little changed as of 9:54 a.m. New York time
- The Nasdaq 100 rose 0.1%
- The Dow Jones Industrial Average was little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index rose 1.6%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.2% to $1.0683
- The British pound fell 0.6% to $1.2379
- The Japanese yen was little changed at 140.05 per dollar
Cryptocurrencies
- Bitcoin fell 1.9% to $26,742.25
- Ether fell 1.9% to $1,867.54
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.73%
- Germany’s 10-year yield advanced seven basis points to 2.38%
- Britain’s 10-year yield advanced six basis points to 4.21%
Commodities
- West Texas Intermediate crude rose 1.5% to $72.82 a barrel
- Gold futures fell 0.3% to $1,962.90 an ounce
