The S&P 500 and Nasdaq Composite gained on Monday as traders shook off recession fears and bought technology shares that were beaten up in the first quarter.
The Dow Jones Industrial Average traded marginally higher. The S&P 500 gained 0.4%, and Nasdaq Composite advanced 1.5%.
Tech shares, which were among the hardest-hit sectors in the first quarter as investors feared the Fed’s rate-hiking plans could hinder the group, rose on Monday.
Twitter gave the Nasdaq a lift after shares surged more than 27% following news that Elon Musk purchased a 9.2% passive stake in the company. Tesla‘s stock also rose 4% on the back of its latest quarterly electric vehicle delivery figures on Saturday, which came in above the year-earlier period.
“Again, because tech really took it on the chin in the first quarter, it ends up being sort of a relief rally for tech at this point as well as for the other growth-oriented sectors,” said Sam Stovall, CFRA chief investment strategist. “The Nasdaq is obviously leading the way … really because there’s not a lot of new news to put additional pressure on the Nasdaq.”
Meanwhile, shares of Starbucks dipped 4.6% after the coffee chain suspended its share repurchase program.
A key section of the yield curve remained inverted after the 2-year and 10-year Treasury yields shifted for the first time since 2019 Thursday evening. The 5-year note yield is also trading above its 30-year counterpart.
“It likely means that the shot clock to a potential recession has started,” said Ryan Detrick of LPL Financial. “The good news, historically it can take upwards of a couple of years potentially for a recession to actually take hold.”
Meanwhile, oil moved higher with WTI crude jumping 2.4% and back above $100 a barrel, while Brent crude rose 1.8%, further raising investor concerns about a possible recession.
Oil’s gains came as investors continue to watch the latest developments in Ukraine. German Chancellor Olaf Scholz said Sunday that Western nations will impose additional sanctions on Russia in the coming days.
“Equity and bond markets continued to send conflicting signals about the economic outlook,” UBS said in a recent note to clients. “We caution against over-interpreting either signal. Yield curve inversions have historically predicted recessions with a long and uncertain lag, while hopes over cease-fire talks have ebbed and flowed,” the firm added.
Wall Street is coming off a winning session, with the Dow, S&P 500 and Nasdaq all posting gains Friday. The S&P 500 also posted its third straight week of gains.
Wall Street has entered a seasonally strong period, with April typically being one of the best months for stocks.
According to data from MKM Partners’ JC O’Hara, the S&P 500 has averaged a gain of 2.41% in April over the last 20 years. The data also shows that the S&P 500 has posted an April gain in 16 of the last 17 years.