4:08pm: Nasdaq falls short of winning day
The Dow closed Monday 327 points, 1%, at 33,601, while the Nasdaq Composite lost 32 points, 0.3%, to 12,189 and the S&P 500 added 15 points, 0.4%, to 4,124. The small-cap Russell 2000 index slid 2 points to 1,801.
The benchmarks ended the day with a rally, but the Nasdaq Composite couldn't quite make it out of the red. The S&P 500 managed its fourth-consecutive positive session.
Investors grappled with news that OPEC+ is cutting 1.66 million barrels per day worth of production.
“The actual cut itself was less of a surprise, given the large increase in global inventories and recession concerns, likely increased by the recent banking struggles,” said Morningstar energy strategist Stephen Ellis. “Higher oil prices are likely to provide a modest boost to inflation, providing more of a dampening effect on the economy.”
12.05pm: WTI crude oil price powered up 6% after surprise OPEC+ output cut
US stocks were mixed in noon trading after OPEC+ surprised the Street with a 1.66 million barrels per day production cut.
At midday, the Dow gained 230 points to 33,504, while the S&P 500 eased 1 point at 4,109 and the tech-heavy Nasdaq slipped 106 points to 12,116.
“For now at least, tech is seen as a safe haven of all things, immune to the news in banking,” Wellington Shields technical analyst Frank Gretz wrote in a note.
“The S&P 500, in turn, seems held together by its own heavy weighting in tech, names like Microsoft, Apple and the like,” he added.
Notable movers included shares of UnitedHealth Group Inc, which rose nearly 4% after The Centers for Medicare & Medicaid Services on Monday proposed rules to update the hospice wage index, payment rates and aggregate cap amount for fiscal year 2024.
9:40am: Market reins in dovish Fed bets
US stocks kicked off second quarter trading mixed after the OPEC+ unexpectedly cut oil output, renewing investors’ inflation worries.
Just after the market opened, the Nasdaq was down 0.4% at 12,177 points, the S&P 500 was flat at 4,109 points, and the Dow Jones was up 0.3% at 33,379 points.
Energy stocks tracked oil prices higher, with Exxon Mobil up 4.4%, Chevron up 4.3%, and BP up 5.6% at the open.
FOREX.com market analyst Fiona Cincotta noted the tech-heavy Nasdaq was leading the declines after OPEC+ surprised the market by cutting oil output in a move which hurts Fed pivot bets.
“With oil prices up 6% so far, Goldman Sachs forecast Brent (crude) will be $95 per barrel by the end of the year, as the momentum for global oil is positive amid a strong recovery in China,” Cincotta said.
She said, as a result, it could mean that inflation will take longer to bring back to the target level and will require more rate hikes from the Fed to cool.
“The markets are now reassessing the chances of a 25-basis point rate hike in May, with a 58% probability of the hike being priced in, up from 48% on Friday,” Cincotta said.
“A dovish pivot, which the market was optimistically pricing in before the OPEC+ decision, with two rate cuts by the end of the year, is now looking even more unlikely.”
6:30am: OPEC+ cut rattles markets
Wall Street looks set to open mixed as second-quarter trading gets underway, with investors digesting the decision by members of OPEC+ to cut production in a week that culminates with the key non-farm payroll data for March.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.4% in Monday pre-market trading, while those for the broader S&P 500 index were flat, and contracts for the Nasdaq-100 shed 0.6%.
Oil prices jumped the most in nearly a year after a surprise announcement on Sunday by OPEC+, which includes Russia, of an additional production cut of about 1.16 million barrels per day (bpd) of oil, on top of an earlier output cut of 2 million bpd. Benchmark Brent crude was up 5.5% early Monday to $84.28.
The Nasdaq Composite led gains on Friday, jumping 1.7% to 12,222 to take the tech-heavy index’s gains for the first quarter to 17%. The S&P 500 rose 1.4% to 4,109 for a quarterly gain of 7%, while the DJIA added 1.3% to 33,274, ending the quarter flat.
“Markets finished a tough opening quarter on a positive note, boosted by signs of slowing inflation and in the absence of any further shocks from the banking sector,” commented Richard Hunter, head of markets at interactive investor.
“In the US, the Federal Reserve’s preferred inflation indicator, the Personal Consumption Expenditures index, rose by 0.3% in February, marginally less than the 0.4% expected. However, US markets have not yet been able to react to a subsequent announcement from oil producers that output cuts could be on the way," he added. This could reignite inflationary concerns and the oil price surged by some 5% on the news, although remaining down by 2.5% in the year to date.”
Ahead of the release of March’s non-farm payrolls report on Friday, today’s data dockets provide further manufacturing updates from the US, the UK, the Eurozone and China, said TickMill Group market analyst Patrick Munnelly.
“Today’s US ISM manufacturing report will likely remain sub 50 as with other major economies factory production remains short of the output seen in the services sector,” he added.