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Dow, Nasdaq dip as rally pauses

by 4 March 2024 · Finance / Financial History / Financial Services

US stocks wavered on Monday to put a record-setting rally on pause as investors girded for a week where Federal Reserve Chair Jerome Powell’s testimony and the monthly jobs report could put equity gains to the test.

The S&P 500 (^GSPC) hugged the flatline after ending Friday with its 16th weekly win in 18 weeks. The Dow Jones Industrial Average (^DJI) fell 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) also slid slightly.

Stocks have racked up gains amid a relentless AI-spurred run-up in techs, which helped the Nasdaq Composite (^IXIC) finally nail a fresh all-time high after a years long wait. That tech rally, and Nvidia’s (NVDA) breakneck rise to a $2 trillion valuation in particular, has prompted concerns about a building bubble — though some analysts are less worried.

Also on Monday, bitcoin’s (BTC-USD) continued rise saw the cryptocurrency top $67,000 to move closer to a record high, while Japan’s Nikkei 225 stock index (^N225) breached the key 40,000 level for the first time.

A dose of reality could lie ahead for the high hopes and the hype, when the Fed’s Powell steps up to speak and the February jobs data arrives. Both will play into calculations for interest rate cuts and shed light on whether the US economy is headed for a “soft landing” or stagflation. Powell is set to give testimony to Congress on Wednesday, while the labor data is due on Friday.

Meanwhile, in a shot across the bows for Big Tech, EU antitrust regulators fined Apple (AAPL) almost $2 billion over App Store restrictions on Spotify (SPOT) and other music streaming services. Apple shares slipped 3% after the news.

Among big movers, Macy’s (M) stock jumped over 14% after bidders Arkhouse and Brigade raised their buyout offer to $6.6 billion, a 33% premium to the closing price on Friday.

Spirit Airlines (SAVE) shares fell more than 12% and JetBlue stock (JBLU) rose 5% after the low-cost carriers announced the termination of their $3.8 billion merger agreement. A federal judge blocked the deal back in January.

Meanwhile, shares in Super Micro Computer (SMCI) popped 18% on Monday ahead of the AI server maker’s entry on the S&P 500.

Live8 updates

  • Trending tickers on Monday

    Tesla (TSLA)

    Shares of Tesla slid roughly 6% on Monday following a decline in the EV maker’s February vehicle shipments in out of its Shanghai factory along with recent reports of an escalating price war in China. Tesla shares are down 23% year-to-date.

    Super Micro Computer (SMCI)

    Super Micro Computer stock popped as much as 26% on Monday ahead of the AI server maker’s entry on the S&P 500. Shares of San Jose, California based IT company have surged more than 290% since the start of the year amid an ongoing AI craze.

    Bitcoin (BTC-US)

    The token topped $67,000 on Monday as it inched closer towards all-time highs. Bitcoin has rallied more than 20% in just one week.

    The cryptocurrency’s is less than a few percentage points away from reaching its November 2021 all time high of $68,789.63.

  • Bitcoin hovers above $66,000, inches towards record high

    Bitcoin (BTC-USD) topped $66,000 on Monday as the cryptocurrency inches closer towards a record high. The token has rallied roughly 50% since the start of the year.

    US-listed bitcoin exchange-traded funds were approved by the Securities and Exchange Commission in January and have attracted sizable amounts of new investor money over the last month.

    The token has moved up by more than 20% in just one week.

    Bitcoin’s last all-time record high of $68,789.63 was reached in November 2021.

  • Good point on stocks and economy by UBS

    Fair point by UBS’s Jason Draho in a new note that just crossed my inbox.

    Maybe stocks are going up for reasons beyond just AI hype. Maybe, just maybe, the economy is stronger than expected and by extension, profits for companies will be stronger than expected for all of this year.

    Good chart below from Draho.

    The Street is raising their economic forecasts. Will they do it again after this Friday's jobs report?

    The Street is raising their economic forecasts. Will they do it again after this Friday’s jobs report? (UBS)

  • Bank of America latest firm to see bullish outcome for stocks in 2024

    Another Wall Street strategy team is out with an optimistic projection on how far stocks will run this year.

    In a note to clients on Sunday, Bank of America’s US equity and quantitive strategy team led by Savita Subramanian boosted its year-end target for the S&P 500 (^GSPC) to 5,400 from 5,000. This projection along with a recent call from UBS are the most bullish predictions for the benchmark average this year among strategists tracked by Yahoo Finance.

    “Bull markets end with euphoria — we’re not there yet,” Subramanian wrote. “Sentiment has improved, but areas of euphoria are limited (AI, GLP-1).”

    BofA’s move is the fifth boosted price target from strategists tracked by Yahoo Finance in the last month. The more optimistic outlooks come as stocks have ripped higher to start the year. The S&P 500 and Nasdaq Composite just closed out their best February since 2015, supported by a second straight quarter of earnings growth and an increased confidence in the trajectory of the US economy.

    Subramanian noted that fourth quarter earnings grew 4% compared to the year prior and analysts aren’t cutting their forecasts for the current quarter at their normal rate. This comes as Bank of America’s economics research team just boosted their outlook for growth this year too. That combination of an increased earnings outlook and a more bullish outlook for the US economy has been a common thread in the recent S&P 500 year-end target boosts across Wall Street.

  • Macy’s stock jumps as private equity firm ups bid to $6.6 billion amid buyout battle

    Macy’s (M) stock jumped as much as 16% on Monday after activist shareholder Arkhouse Management upped its buyout bid to $6.6 billion for the iconic retailer. Macy’s had rejected a prior $5.8 billion offer from the private equity firm and its partner, Brigade Capital, in late January.

    As Yahoo Finance’s Brooke DiPalma reports, Macy’s (M) is looking to turn over a new leaf, but a battle to take it private is growing and doubts linger on whether the company can engineer a comeback with its current plans.

    Tony Spring, freshly minted as CEO a month ago, acknowledges that the business needs to change.

    “We are not going to leave Macy’s as it is today. It’s foolhardy to think that leaving the business as it exists today is a recipe for success in the future,” Spring told Yahoo Finance.

    Spring said the brand will “evolve,” adjust its product offering, and integrate its physical and digital presence “thoughtfully,” but will do so “with the appropriate action, … time, and support of our organization.”

    Arkhouse Management’s new bid released on Sunday shows the activist investor isn’t waiting for the results.

    Read more here.

  • Stocks pause rally, bitcoin tops $65,000

    Stocks opened lower on Monday, pausing their recent rally as the market prepares for testimony from Federal Reserve Chair Jerome Powell this week and a monthly jobs report that could put equity gains to the test.

    The S&P 500 (^GSPC) shed about 0.2% while the Dow Jones Industrial Average (^DJI) fell 0.5%. The tech-heavy Nasdaq Composit (^IXIC) was little changed.

    Also on Monday, bitcoin (BTC-USD) rose to top $65,000, inching closer to a record high.

  • Spirit stock sinks on termination of JetBlue merger agreement

    Spirit Airlines (SAVE) stock plunged as much as 16% in pre-market trading on Monday after its $3.8 billion merger agreement with JetBlue (JBLU), blocked by a court in January, was terminated by the low-cost carriers.

    “After discussing our options with our advisors and JetBlue, we concluded that current regulatory obstacles will not permit us to close this transaction in a timely fashion under the merger agreement,” Spirit’s CEO Ted Christie said in a company statement.

    JetBlue’s proposed acquisition of Spirit fell apart after a federal judge blocked the deal on Jan. 16 amid antitrust concerns.

    Shares of JetBlue gained more than 5% in pre-market trading after the announcement. Spirit shares are down roughly 60% year to date.

  • The head-shaking stats around Nvidia

    Some of the hottest trending tickers on Yahoo Finance this morning are crypto-related. No surprise as bitcoin has busted through $65,000 and excitement builds for a potential halving event in April.

    But to me, the main story in markets remains the frenzied trade around AI sweetheart Nvidia (NVDA). As this stock goes, so too will go the market in 2024 (and 2025, 2026, 2027…).

    A few stats on Nvidia to get you thinking:

    • Nvidia is now third most valuable US company: $2.05 trillion market cap.

    • It only took 180 trading days for Nvidia’s market cap to go from $1 trillion to $2 trillion.

    • The stock is rated “uy” by 92% of the analysts covering it.

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