US close: Tech rally drives gains as S&P 500 nears record high

dl wall street wall st new york city nyc ney york stock exchange nyse nasdaq dow jones industrial average djia trading us usa united states of america 2023120702241 — Sharecast graphic / Josh White

Huge gains from tech stocks and falling oil prices and bond yields ignited stocks on Monday, with the S&P 500 coming within 36 points of its all-time closing high.

The S&P 500 finished 1.4% or 66 points higher at 4,764 by the close, inching closer to the record level of 4796.56 reached in January 2022. The Nasdaq meanwhile surged 2.2% to 14,844, though the Dow rose only 0.6% to 37,683, held back by a heavy fall from aircraft maker Boeing.

Economic data was thin on the ground on Monday, though things will pick up later in the week with the consumer price index (CPI) due out on Thursday. The yield on a 10-year US Treasury was at 4.027% by the close, but dipped below the 4% level earlier on, compared with a previous close of 4.046%.

Oil stocks were hit as major producer Saudi Arabia cut prices across the board, sending benchmark crude sharply lower on Monday. Brent crude was down 3.91% to $75.68 a barrel, while West Texas Intermediate fell 4.46% to $70.52.

Producer Saudi Aramco cut the official selling price for its flagship Arab Light crude to a $1.50-a-barrel premium to the regional benchmark for February, its lowest level since November 2021. The $2-a-barrel reduction was bigger than expected.

Chris Beauchamp, chief market analyst at IG, said the oil-price slump "helped the mood" on Wall Street by raising hopes that inflation will continue to ease.

“Friday’s post-[jobs report] bounce struggled to maintain momentum into the weekend, but with oil prices slumping again traders have managed to rediscover their bullish mood. Saudi Arabia’s move to reduce the official selling price for oil sends worrying signals for the crude market, but stocks will be grateful for any sign that inflation will keep abating," Beauchamp said.

"But the pending US CPI figure and upcoming earnings means inflows could remain limited for the time being.”

This week will see the start of fourth-quarter earnings season in the US with banking giants JPMorgan Chase, Bank of America, Citigroup and Wells Fargo all due to unveil their latest figures on Friday.

Boeing tanks, tech stocks jump

Aircraft manufacturer Boeing shares were in free fall after the US aviation watchdog said 171 Boeing 737 Max 9 planes would remain grounded until it was satisfied that the planes were safe. The Federal Aviation Administration's investigation into the jets comes after part of an Alaska Airlines plane's fuselage fell off on Friday.

In contrast, American Airlines was flying higher after Morgan Stanley analysts lifted their rating on the stock from 'equal weight' to 'overweight', following a "decent" holiday season. The stock was also helped by the fact that it doesn't have any Boeing 737 Max 9 aircraft in its fleet.

Tech stocks were performing well, rebounding after driving much of last week's declines. Apple, Salesforce, Intel, IBM and Microsoft were all putting in decent gains.

Oil stocks underperformed the wider market with Chevron one of only the six stocks on the Dow to register losses as oil prices fell. Exxon Mobil and Devon Energy also declined.

Johnson & Johnson rose strongly after agreeing to buy clinical-stage biopharmaceutical company Ambrx for around $2bn. J&J said the planned acquisition presents a distinct opportunity for it to design, develop and commercialise targeted oncology therapeutics.

Dow Jones - Risers

Salesforce.Com Inc. (CRM) $260.87 3.88%
Intel Corp. (INTC) $48.45 3.33%
Amgen Inc. (AMGN) $310.97 2.63%
Walgreens Boots Alliance, Inc. (WBA) $25.64 2.52%
Apple Inc. (AAPL) $185.56 2.42%
Microsoft Corp. (MSFT) $374.69 1.89%
Nike Inc. (NKE) $103.62 1.51%
Home Depot Inc. (HD) $347.93 1.46%
International Business Machines Corporation (CDI) (IBM) $161.14 1.24%
Caterpillar Inc. (CAT) $292.25 1.15%