U.S. stocks rallied at the open on Monday as Wall Street looked to recover from its worst week of the year.
The S&P 500 (^GSPC) rose 0.8%, while the Dow Jones Industrial Average (^DJI) gained 0.6%. Contracts on the tech-heavy Nasdaq Composite (^IXIC) rose 1.1%.
The yield on the 10-year US Treasury note fell to 3.91% on Monday morning.
On the economic data side, new orders for durable goods in January fell to 4.5%, the biggest drop since April 2020, the Bureau of Statistics reported. The drop was significantly higher than economists’ estimate of 4.0%.
Lydia Boussour, Chief Economist at EY Parthenon said: “The manufacturing sector will remain under pressure in the coming months, but the details of the January report on durable goods orders and shipments show that manufacturing activity’ They started the year working on the best information the headlines had to offer,” said Lydia Boussour, EY Parthenon Chief Economist. , he wrote in a statement after the release.
Meanwhile, the National Association of Realtors’ index of pending home sales rose 8.1% to 82.5 in January, higher than the 1.0% estimate by Bloomberg economists, according to data released by the association on on Monday. On a year-over-year basis, however, pending transactions are down about 24%.
Stocks closed their worst week of 2023 on Friday after a key measure of inflation showed that it unexpectedly picked up in January and consumer spending jumped. The “core” price index for the Consumer Price Index (PCE) – which excludes food and energy – showed prices rose 0.6% in January and 4.7% from last year.
The Commerce Department also reported consumer spending rose 1.8% last month from December, the biggest increase in nearly two years. The findings have renewed concerns among investors that the Fed will continue to tighten its grip on inflation.
Falling optimism pressured the major indexes, as the Dow Jones fell 3% for a fourth straight week, while the S&P 500 shed 2.7% in its worst week since early December and the tech-heavy Nasdaq it sank by 3.3%.
Data collected by 22V Research found that inflation has increased and the relationship between growth and value has jumped to the highest level since at least 2005.
This week, investors will continue to be interested in the retail sector, with earnings from Target ( TGT ) on the floor before the market opened on Tuesday after Walmart ( WMT ) warned about guidance profit margin for the next year. Home Retailers (HD) also has disappointing guidance for fiscal 2023.
Elsewhere in the financial calendar are results from Costco (COST), Macy’s (M), Dollar Tree (DLTR), and Kohl’s (KSS) to show the retail side.
Meanwhile, the share of companies leading analysts’ expectations in the fourth quarter is relatively low compared to history. Data from FactSet showed that 68% of S&P 500 companies reported fourth-quarter earnings that beat expectations, down from the five-year average of 77% and the 10-year average of 73%.
In one move, shares of Seagen Inc. ( SGEN ) jumped Monday morning after a report from The Wall Street Journal said Pfizer ( PFE ) is in preliminary talks to buy the cancer drug company in what could be a multibillion-dollar deal.
Berkshire Hathaway Inc. (BRK-B) was launched following CEO Warren Buffett’s annual letter to shareholders, which gives readers a glimpse into his thoughts on stock buybacks, taxes, corporate accounting, and his thoughts on confidence about the economy.
Shares of Union Pacific ( UNP ) rose after the shipping giant announced plans to appoint a new chief executive following lobbying pressure to fire Lance Fritz.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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