The major indexes suffered notable losses last week, with the technology sector bearing the brunt of the selling.
However, bulls were given a reprieve Monday, with tech stocks soaring as bargain hunters looked past spiking Treasury yields to scoop up some of Wall Street's favorite names at a discount.
All three main benchmarks finished last week with losses of more than 2% as Treasury yields jumped on growing expectations the Federal Reserve may not be done raising interest rates. Today, however, the rate-sensitive Nasdaq Composite climbed 1.6% to 13,497 and the S&P 500 added 0.7% to 4,399, even as the 10-year Treasury yield hit its highest level since 2007.
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Helping boost the Nasdaq and S&P 500 were big returns for several mega-cap stocks. Nvidia (NVDA), for one, rose 8.5% ahead of the chipmaker's appearance on the earnings calendar this Wednesday evening. Other big movers included Facebook parent Meta Platforms (META, +2.4%) and electric vehicle stock Tesla (TSLA, +7.3%).
Palo Alto spikes after unusually timed earnings report
But it was Palo Alto Networks (PANW) that was one of Monday's most notable gainers. The cybersecurity stock surged 14.8% after the company disclosed its quarterly earnings after Friday's close – an unusual time slot for a firm to report its financial results. PANW unveiled higher-than-expected fiscal fourth-quarter earnings and revenue, while giving solid guidance.
Palo Alto also said there has been strong demand for XSIAM, its artificial intelligence (AI) security operations platform, particularly after a July ruling from the Securities and Exchange (SEC) commission that cyberattacks must be reported within four days after they are deemed "material" by a company.
"This is a big week for tech stocks and optimism is brewing that Nvidia will deliver some good results later this week," says Edward Moya, senior market strategist at currency data provider OANDA. "Also providing a boost was Palo Alto’s results that we got after the Friday close." The key for tech stocks going forward is to show how they can make money off of AI, Moya adds.
J&J weighs on Dow
The Dow Jones Industrial Average wasn't as resilient as the other two indexes, shedding 0.1% to 34,463 on weakness in Johnson & Johnson (JNJ). The blue chip stock tumbled 3.0% after the company said a $35 billion exchange offer for its Kenvue (KVUE, +0.1%) spinoff was too popular, and those that participated will only be able to convert a portion of their JNJ shares for KVUE stock.
Looking ahead, all eyes will be on this week's annual Federal Reserve gathering in Jackson Hole, Wyoming, which is slated to kick off Thursday.
"This year's Jackson Hole symposium occurs near a pivotal juncture for the Fed," says Matthew Luzzetti, senior economist at Deutsche Bank. "Whether it takes an additional rate hike or two, monetary policy is nearing the sufficiently restrictive policy stance the Fed has long sought after eleven rate increases." Still, Luzzetti doesn't expect Fed Chair Jerome Powell to send any strong signals about the central bank's near-term policy plans as his "data dependence message" from the July Fed meeting "was clear."
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