Stocks slipped on Monday as traders took a pause after the S&P 500 and Dow logged fresh record highs last week.
The Dow drifted lower, shedding 55 points, or 0.2%, to steady just below its recent all-time high. The S&P 500 dipped, while the Nasdaq underperformed as technology stocks gave back some recent gains.
For 2021 to date, the cyclical energy and financials sectors have handily outperformed the broader market, overtaking the technology-heavy sectors that led the market higher last year. However, this rotation has lost steam in April, with information technology, communication services and the consumer discretionary sectors outperforming for the month-to-date.
"Amid new highs it’s not surprising for the market to be moving somewhat in a holding pattern of late. And tech’s somewhat surprising comeback could have some traders questioning if tech names are here to stay, or if cyclical sectors will outperform as the economy edges closer to full recovery," Chris Larkin, managing director of trading and investing product at E-Trade Financial, said in an email. "While it may be premature to declare the end of tech’s underperformance phase, keep in mind that the sector is more than a handful of mega-cap names—traders may see opportunity in lesser known pockets of the sector."
Investors over the past week have eagerly looked ahead to the start of earnings season, with big banks kicking off the first-quarter reporting season later this week. A slew of much stronger-than-expected economic data has suggested that corporate profits would jump tandem with the rebounding economy, especially in those sectors most deeply impacted by the coronavirus pandemic.
"The initial reopening of the economy will trigger a huge rebound in margins across sectors which have been hit hardest by the COVID crisis," Ian Shepherdson, Pantheon Macroeconomics chief economist, wrote in a note Monday. "The unprecedented surge in households' cash balances over the past year – mostly due to the enforced drop in spending on services, augmented by stimulus payments – represents a potential wave of demand, while supply is constrained by business failures, especially in the restaurant sector."
"Fed officials appear to be braced for a period of margin expansion – Chair Powell has talked often of the likelihood of 'transitory' inflation post-COVID – but the key question is whether this will morph into a sustained increase in inflation," Shepherdson added.
Still, however, Federal Open Market Policymakers have to date demurred at the notion that upward price pressures might prove more than fleeting. And Fed Chair Jerome Powell suggested Sunday that the risks were still skewed to the downside – not toward overheating – when it came to the post-pandemic economy, telling CBS News in a 60 Minutes interview that a "principal" concern is that "we will reopen too quickly, people will too quickly return to their old practices, and we'll see another spike in cases.”
4:00 p.m. ET: Stocks end little changed, with all eyes on earnings later this week
Here's where the three major indexes closed out Monday's session:
S&P 500 (^GSPC): -0.7 points (-0.02%) to 4,128.10
Dow (^DJI): -54.78 points (-0.16%) to 33,745.86
Nasdaq (^IXIC): -50.19 points (-0.36%) to 13,850.00
2:59 p.m. ET: U.S. budget deficit hits record high for March amid pandemic-related stimulus measures
The U.S. budget deficit reached a March high last month amid a wave of fiscal stimulus, which included $1,400 direct checks to most Americans, enhanced unemployment benefits and state and local aid that altogether totaled nearly $2 trillion.
The U.S. government deficit yawned to $659.6 billion in March from $119.1 billion in February, according to Treasury Department data Monday. This was wider than the $658 billion deficit consensus economists were expecting, according to Bloomberg data. For 2021 to date, the budget deficit has totaled $1.706 trillion, versus $743.5 million in the same period last year.
1:48 p.m. ET: Stocks hold lower as tech shares give back gains
The three major indexes held lower in intraday trading on Monday, with the communication services and information technology sectors lagging in the S&P 500. Drops in Intel and Boeing dragged on the Dow, with the former shedding more than 4.5% after Nvidia said it would begin offering its own server microprocessors to encroach on Intel's business.
Here's where markets were.trading as of 1:48 p.m. in New York:
S&P 500 (^GSPC): -5.43 points (-0.13%) to 4,123.37
Dow (^DJI): -102.82 points (-0.3%) to 33,697.78
Nasdaq (^IXIC): -54.51 points (-0.39%) to 13,845.77
Crude (CL=F): +$0.32 (+0.54%) to $59.64 a barrel
Gold (GC=F): -$12.10 (-0.69%) to $1,732.50 per ounce
10-year Treasury (^TNX): +0.1 bps to yield 1.676%
10:48 a.m. ET: Alibaba shares jump after record antitrust fine, with analysts calling 'removal of overhang' a positive for shares
Shares of Alibaba (BABA) surged Monday morning in New York even after Chinese regulators imposed a record $2.8 billion fine on the company following a monopoly investigation.
"We're happy to get the matter behind us," Alibaba Executive Vice Chairman Joseph Tsai said during a call with analysts. "Globally, the trend is that regulators will be more keen to look at some of the areas where you could have unfair competition. So I think the good thing about this is that we are — we have gone through this process with the regulators."
Wall Street analysts largely agreed that the fine came in lower than expected, removing a cloud of uncertainty that had followed the stock for months after Chinese regulators opened an antitrust probe into the e-commerce giant.
"Positively, Alibaba does not expect further investigations on this matter, and we believe the removal of this overhang could be a positive for shares," Raymond James analyst Aaron Kessler, who rates shares of Alibaba as a strong buy, wrote in a note Monday morning.
9:30 a.m. ET: Stocks open lower, steadying below record levels
Here's where markets were trading Monday morning shortly after market open:
S&P 500 (^GSPC): -7.14 points (-0.17%) to 4,121.66
Dow (^DJI): -71.71 points (-0.21%) to 33,728.89
Nasdaq (^IXIC): -46.10 points (-0.33%) to 13,854.08
Crude (CL=F): +$1.24 (+2.09%) to $60.59 a barrel
Gold (GC=F): -$7.30 (-0.42%) to $1,737.50 per ounce
10-year Treasury (^TNX): +0.7 bps to yield 1.673%
8:36 a.m. ET: Microsoft agrees to purchase AI speech recognition company Nuance Communications in $19.7 billion deal
Microsoft (MSFT) announced Monday morning that it agreed to purchase artificial intelligence speech recognition company Nuance Communications (NUAN) in an all-cash transaction valued at $19.7 billion, including Nuance's debt. The announcement confirmed earlier reporting of the deal over the weekend by Bloomberg.
Microsoft will purchase Nuance for $56.00 per share, offering a 23% premium over Nuance's closing price last Friday. Nuance's suite of products include a range of transcribing and other speech-recognition services used by health-care providers, including PowerScribe One and Dragon Medical One.
“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” Microsoft CEO Satya Nadella said in a press statement. “AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud in Healthcare and Nuance.”
7:53 a.m. ET: Uber shares jump after delivery business posts record month in March, reaffirms profitability timeline
Shares of Uber (UBER) jumped 2.2% in early trading Monday morning after the company said in a securities filing that its delivery business surged to a record annual gross bookings run-rate of $52 billion in March, with a pandemic-era boom in food delivery extended well into the first months of this year. The annualized gross bookings run-rate represented a jump of more than 150% over last year.
Uber's food delivery business has served as the company's growth engine during the pandemic, while demand for ride-hailing services dwindled. However, the mobility business showed signs of a resurgence last month, exceeding $30 billion in gross bookings run-rate for the best level since March of last year. Average daily gross bookings rose 9% month-over-month.
"As vaccination rates increase in the United States, we are observing that consumer demand for Mobility is recovering faster than driver availability, and consumer demand for Delivery continues to exceed courier availability," Uber said in the filing. "We continue to believe that Uber is on track to reach quarterly Adjusted EBITDA profitability in 2021."
7:08 a.m. ET:: Stock futures point to a lower open, retreating from record highs
Here's where markets were trading Monday morning:
S&P 500 futures (ES=F): 4,111.75, down 7.75 points or 0.19%
Dow futures (YM=F): 33,621.00, down 61 points or 0.18%
Nasdaq futures (NQ=F): 13,782.00, down 47.5 points or 0.34%
Crude (CL=F): $60.06 per barrel, +$0.74 (+1.25%)
Gold (GC=F): $1,740.80, -$4.00 (-0.23%)
10-year Treasury (^TNX): -0.4 bps to yield 1.662%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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