The major US equity indices scrambled back into positive territory late in Monday’s trading after an early slide brought the S&P 500 to its lowest point of 2022. Bargain hunters stepped in after stocks lost ground in intraday trading, adding to a massive sell-off seen late last week.
The buy-on-the-dip crowd entered the market after a retreat on Friday that saw the Nasdaq fall more than 4% and record its lowest close since late 2020. Monday’s stock trading also took place as Treasury yields tested another milestone.
The S&P 500 (SP500) reached its lows of 2022, dipping below 4,100 during midday trading. However, in the last hour of the session, the index reversed its slide and finished +0.6%. The Nasdaq (COMP.IND) ended +1.6% and the Dow (DJI) closed +0.3%.
Looking at the day’s preliminary closing numbers, the Dow Jones rose 84.29 points to finish at 33,061.50. The S&P 500 posted a gain of 23.45 points, ending the day at 4,155.38. The Nasdaq concluded trading at 12,536.02, an advance of 201.38 points on the day.
Despite the higher finish for the broader averages, the day’s sector breakdown pointed to a more uncertain session. Six of 11 S&P sectors ended in the green, led by Communication Services, which jumped 2.4% thanks to a 5% rise in Meta Platforms. Meanwhile, Real Estate and Consumer Staples were among the worst performers.
During the session, the 10-year Treasury yield topped 3% for the first time since 2018. However, a late-day moderation left the 10-year at 2.99%, up around 11 basis points on the day. The 2-year yield was up 4 basis points to 2.74%.
The bond selloff came with the Fed decision just two days away.
“Recent Fed rhetoric has continued to increase hawkishness – emphasizing that policy should move rapidly toward estimates of ‘neutral,'” Credit Suisse economists wrote. “With inflation elevated and concerns about credibility on the rise, we expect the Fed to avoid any dovish surprises and at least deliver what the market is going pricing into upcoming meetings.”
They are looking for half-point hikes at the next three meetings.
In economic news, the ISM manufacturing index for April showed an unexpected drop.
“The supply chain measures in the survey are mixed, with the order backlog down four points to its lowest reading since October 2020, while delivery times rose to a five-month high,” Pantheon Macro said. “Prices paid dipped slightly, thanks to lower oil prices, but the index remains elevated.”
The firm added: “In short, supply-chain pressures overall are broadly stable, but still bad. And the picture could easily removed again, given developments in China.”
Among active stocks, Global Payments was a standout S&P decliner with concerns about revenue guidance. Vaccine makers were among the best performers after Pfizer’s COVID pill hit a roadblock.