Stocks were mixed on Monday as traders looked forward to another busy week of corporate earnings and economic data following the Federal Reserve’s latest monetary policy pivot.
The S&P 500 and the Dow fell, while the Nasdaq gained just after the opening bell. Treasury yields rose slightly on the long end of the curve, with the benchmark 10-year yield climbing back above 1.8%. U.S. crude oil prices built on recent gains after rising for a sixth straight week.
January was a volatile trading month for US equities as risk-asset investors considered the implications of signals from the Federal Reserve to trigger more aggressive policies to help curb soaring inflation. Goldman Sachs economists said over the weekend they now expect the Fed to hike rates by a quarter point five times this year, up from the four hikes the company has previously seen. . The prediction echoes the path followed by other major banks, including Bank of America, which now forecasts seven rate hikes, and JPMorgan, which forecasts five.
Whether the Fed is able to raise interest rates and otherwise adjust policies to lower inflation without hurting economic growth and corporate earnings remains a key question, however.
“No central bank wants to kill the economy to bring down inflation,” Kathy Jones, Charles Schwab’s chief fixed income strategist, told Yahoo Finance Live on Friday. Jones said she still expects three interest rate hikes this year, matching the Fed’s December signal. “Right now I think there’s a risk that they’re moving too far too fast and overestimating the strength of the economy and the rise in inflation that we’re seeing. I think that’s probably a greater risk that they move too slowly and allow inflation to outpace them even further.”
With the prospect of higher interest rates and tighter financial conditions, stocks have been trading choppy over the past month. This was particularly the case for technology companies highly valued based on expected future earnings, which would come under pressure from higher rates. The Nasdaq Composite is down 12% from the start of the month to Friday’s close as the index continues to languish in a correction, or a decline of at least 10% from a recent record high. The S&P 500 has so far fallen 7% in January, which would mark its worst month since March 2020. The Dow was down 4.4%.
New catalysts for the market and individual stocks are expected to arrive this week with another full list of corporate earnings results due for release. Mega-cap tech companies including Alphabet (GOOG), Amazon (AMZN) and Meta Platforms (FB) are each set to report quarterly results, alongside other closely watched names including AMD (AMD), Snap (SNAP) , Wynn Resorts (WYNN) and Merck (MRK). And those will also come in a week loaded with new economic data, including the Labor Department’s monthly jobs report.
On Friday, the expected earnings growth rate for the S&P 500 was 24.3%, based on actual results from companies that have reported so far and projected results for those that have reported later, according to FactSet. If that rate materializes as expected, it would mark the fourth consecutive quarter where S&P 500 earnings growth exceeded 20%.
9:41 a.m. ET: Citrix Systems to be acquired by Elliott Investment Management, Vista Equity Partners for $13 billion
Software company Citrix Systems is set to be bought by investment firms Elliott Investment Management and Vista Equity Partners in a $16.5 billion leveraged buyout, the company announced Monday. This confirmed media reports in recent weeks that such a deal was under consideration.
Citrix shareholders are each expected to receive $104.00 in cash per share as part of the deal. That total, however, is 1.5% lower than Friday’s closing price.
With this deal, Citrix will be combined with Tibco Software, another Vista Equity Partners portfolio company. This would translate into a software company serving 400,000 customers and 100 million users in 100 countries.
“The combined company will be positioned to provide a comprehensive, secure and optimized infrastructure for enterprise application and desktop delivery and data management to advance hybrid cloud IT strategies and meet the needs of the modern enterprise,” Citrix Systems said in its press release.
9:30 a.m. ET: Stocks open mixed
Here’s where the shares were trading just after the opening bell on Monday morning:
S&P 500 (^GSPC): -7.57 (-0.17%) to 4,424.28
Dow (^ DJI): -182.62 (-0.53%) to 34,542.85
Nasdaq (^IXIC): +17.74 (+0.13%) to 13,782.92
Raw (CL=F): +$0.68 (+0.78%) at $87.50 per barrel
Gold (CG=F): +$10.80 (+0.60%) to $1,797.40 per ounce
10-year cash flow (^TNX): +2.2 bps for a yield of 1.802%
7:44 a.m. ET Monday: Stock futures fall to end volatile month of trading
Here’s where the shares were trading before the opening bell on Monday morning:
S&P 500 Futures Contracts (ES=F): -20 points (-0.45%), to 4,403.25
Dow futures (JM=F): -226.00 points (-0.65%), to 34,369.00
Nasdaq futures contracts (NQ = F): -5.25 points (-0.04%) to 14,427.75
Raw (CL=F): +$0.50 (+0.58%) at $87.32 per barrel
Gold (CG=F): +$5.60 (+0.31%) at $1,792.20 per ounce
10-year cash flow (^TNX): +1.8 bps for a yield of 1.798%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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