The Dow Jones Industrial Average outperformed the broader market on Monday as Wall Street's recent tech rally continues to cool as big tech names trade around record highs. The 30-stock average rose over 260 points, with the S&P 500 Index and Nasdaq Composite fell 0.3% and 1%, respectively.
Here's how the market settled on Monday:
S&P 500 Index (NYSE: SPY): -0.31% or -16.75 points to 5,447.87
Dow Jones Industrial Average (NYSE: DIA): +0.67% or +260.88 points to 39,411.21
Nasdaq Composite Index (NASDAQ: QQQ): -1.09% or -192.54 points to 17,496.82
In Focus:
The information technology sector was the weakness on the S&P 500 on Monday, declining more than 2% as market participants sold off growth names at their highs in favor of sectors like energy and financials, which rose 2.7% and about 1%, respectively. Monday's session of the tech-heavy Nasdaq's worst day since April.
Bank of America analyst Chintan Kotecha said in a note to clients that commodity trading advisors (CTA), who heavily operate in futures trading, could quickly sell tech stocks as the sector continues to show more signs of weakness in recent sessions.
"According to our models, CTAs are likely now back to very stretched levels of long positioning in NASDAQ-100 futures. With positioning at these levels, stop loss triggers become tighter and with the last two days' declines our models estimate pressure fro CTA unwinds starting at levels 2.8% lower from Friday's close," Kotecha said in a note.
Federal Reserve Watch:
San Francisco Fed President Mary Daly said in remarks in her home district on Monday that while the central bank has made progress towards its goal of bringing inflation down to its 2% target, "we need to finish the job," in terms of monetary policy.
"We need to be ready to respond to however the economy evolves," Daly said, highlighting how the economy could take many roads to recovery. These include a slow decline in inflation spurring the need for higher-for-longer interest rates, a fast inflation comedown which would require interest rate cuts, of a gradual decrease alongside a "rebalancing in the labor market," which would call for a normalization of policy over time.
In the News:
RXO (NYSE: RXO) shares rose on Monday after the trucking company announced it will acquire Coyote Logistics from UPS (NYSE: UPS) in a deal worth $1.025 billion. UPS Chief Executive Carol Tome said the decision to sell Coyote will allow the premium small package provider to better "focus on our core business."
"This acquisition will provide RXO with both immediate and long-term opportunities for revenue and earnings growth and will generate significant returns for shareholders," RXO CEO Drew Wilkerson said in a statement.
Shares of ResMed (NYSE: RMD) and Inspire Medical Systems (NYSE: INSP) declined on Monday after Eli Lilly (NYSE: LLY) on Friday said it has applied for U.S. approval to expand the use of its weight loss drug Zepbound for the treatment of obstructive sleep apnea, of the most common sleep-related disorders. Both companies make medical devices that assist breathing while a patient is asleep.
Apple (NASDAQ: AAPL) came under pressure as the European Commission said Monday the tech giant has broken the new Digital Markets Act, citing its claim that Apple does not allow customers of its App Store to find cheaper third-party options. The company could face fines up to 10% of its total worldwide annual turnover.
Novo Nordisk (NYSE: NVO) announced Monday it will spend $4.1 billion to build a new manufacturing plant in Clayton, North Carolina in effort to increase production of its groundbreaking weight loss drug Wegovy, diabetes treatment Ozempic, as well as other injectable medicines. The 1.4 million-square-foot facility is expected to be completed between 2027 and 2029, the company said.
For Tuesday:
Market participants will turn their attention towards more Fedspeak as well as data on consumer confidence for June on Tuesday.