Stock Market Today: Stocks Nudge Higher as Treasury Yields Spike
Stocks pared this morning's lofty gains as interest rates rose, but still managed to hold on for a win.
Stocks opened the week's trading solidly higher amid reports that China is easing some of its COVID-related restrictions following a roughly two-month lockdown across several heavily populated areas of the country.
Additionally, a report in The Wall Street Journal indicated Chinese officials are nearing an end to their probes into several U.S.-listed firms – including ride-hailing company Didi Global (DIDI, +24.3%) – adding to signs Beijing may be taking steps to boost economic growth.
"While there may be little excitement in the U.S. market, China's recent attempts to reassure support to domestic firms may have a positive impact on global bourses this week," says Kunal Sawhney, CEO of Australian research firm Kalkine Group. "Major technology stocks worldwide were trading higher on Monday after Beijing said it is concluding its DiDi Global probe. After the statement, ADRs of Alibaba Group (BABA, +6.2%), DiDi Global, Baidu (BIDU, +2.5%) and JD.com (JD, +6.5%) saw significant gains."
But the major benchmarks began easing back from their earlier gains by midday amid a spiking 10-year Treasury yield – which jumped 8.9 basis points (a basis point is one-one hundredth of a percentage point) to 3.044%, its highest level since December 2018.
Strength in the communication services (+0.04%) and consumer discretionary (+1.0%) sectors helped markets regain their footing in early afternoon trading, thanks in large part to a solid day for Amazon.com (AMZN). The e-commerce giant added 2.0% on the first day of trading following its 20-for-1 stock split.
At the close, the Nasdaq Composite (+0.4% at 12,061) and S&P 500 Index (+0.3% at 4,121) were modestly higher. Meanwhile, the Dow Jones Industrial Average – which was up 1% at its session peak – eked out a 0.05% gain to end at 32,915.
Monday's lurches could be a sign of what's to come for this week, says Dan Wantrobski, technical strategist and associate director of research at Janney Montgomery Scott. All eyes will be on this Friday's important consumer price index (CPI), slated for release at 8:30 a.m. ET. Until then, Wantrobski says, "expect volatile, choppy trading in both directions."
Other news in the stock market today:
- The small-cap Russell 2000 rose 0.4% to 1,889.
- U.S. crude futures slipped 0.3% to end at $118.50 per barrel.
- Gold futures gave back 0.3% to finish at $1,843.70 an ounce.
- Bitcoin jumped 6.4% to $31,432.36. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- A lawyer for Tesla (TSLA, +1.6%) CEO Elon Musk sent a letter to Twitter (TWTR, -1.5%) accusing the social media platform of refusing Musk's data requests. The letter said Musk, who is a prospective buyer of Twitter, believes the company "is actively resisting and thwarting his information rights (and the company's corresponding obligations) under the merger agreement" to provide him with data regarding its active user base. "This stems back to last month when Musk said he was placing the deal on hold to seek greater clarification on the status of bots and fake accounts," says CFRA Research analyst Angelo Zino (Hold). "We continue to believe that Elon is playing hard ball, which makes complete sense (pending offer at $54.20 per share), to gain leverage/options to either reduce his offer price or indeed completely walk away if he gets cold feet (Musk did rush in and failed to do due diligence). Ultimately, we are finding it increasingly difficult to envision a scenario where this doesn't get settled in the courts."
- Several solar stocks rallied today after the Biden administration said it would suspend tariffs on solar panel products from four countries – Cambodia, Malaysia, Thailand and Vietnam – for 24 months. Enphase Energy (ENPH, +5.4%), SolarEdge Technologies (SEDG, +2.9%) and Sunrun (RUN, +5.9%) were among those that gained ground.
What Stocks are the Billionaires Buying?
Recession risks are on the rise, but there is still time for investors to prepare. So say a team of strategists at Wells Fargo Investment Institute (WFII) in their latest investment strategy report.
"Recessions are a normal part of an economic cycle," writes Michelle Wan, investment strategy analyst at WFII. "Even though it is difficult to predict the timing and magnitude of one, there are signals cautioning investors so they can prepare portfolios ahead of a recession."
Wan points to the Conference Board's leading economic indicators index, which measures the health of the U.S. economy via the labor market, credit market, stock market and new orders in manufacturing. The index is currently declining at a rapid pace, the strategist notes, signaling an "increased probability of a recession."
Investors looking to prepare their portfolios for such a scenario may want to consider gaining exposure to commodities or other defensive sectors, such as healthcare, consumer staples and utilities, Wan adds.
Another tactical approach for investors is to see what the smart money is doing. Institutional investors, hedge funds and billionaires have access to research and insights that most retail investors do not, which makes their top stock picks all the more enlightening to follow – particularly at a time of economic uncertainty. Read on as we take a closer look at 15 companies the billionaire class bought in the first quarter of 2022. While some of the names featured here are familiar blue chips, others maintain a much lower profile.