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S&P 500 Barely Gains Ahead of Powell Testimony, Jobs Report

Reuters2023-03-07

* Apple rises as Goldman begins coverage with 'buy'

* Silvergate shares tumble after it suspends payments network

* Factory orders fall in January

* Indexes: Dow up 0.12%, S&P up 0.07%, Nasdaq down 0.11%

March 6 (Reuters) - The S&P 500 closed barely higher on Monday, giving up most of its earlier gains as investors were cautious ahead of this week's testimony from Federal Reserve Chair Jerome Powell and the closely watched U.S. jobs report.

Earlier in the session the indexes looked much stronger with the Nasdaq gaining more than 1% before closing lower. The biggest boost had come from iPhone maker Apple Inc after Goldman Sachs initiated coverage with a "buy" rating.

But equities gave up earlier gains as yields on U.S. 10-year Treasury notes and the 2-year Treasuries yield came back from early declines after data showed new orders for U.S.-manufactured goods fell less than expected in January.

Rising bond yields tend to weigh on equity valuations, particularly those of growth and technology stocks, as higher rates reduce the value of future cash flows.

"The market is in a holding pattern because this week will be key to shedding light on what's going on with the U.S. economy," said Irene Tunkel, chief U.S. equity strategist for BCA Research in New York, who plans to keep a close watch on February's U.S. non-farm payrolls report, due out Friday.

"People are worried about the jobs number and the economic data because they're worried about what the Fed will do. Ultimately all roads lead to the Fed."

And with potential Fed rate hikes their key concern, Monday's data had already dampened investor enthusiasm, said Shawn Cruz, head trading strategist at TD Ameritrade in Chicago.

"The market pullback was because there is still a lot of work to do on inflation," said Cruz. "We're not seeing the type of demand slowdown we need to see. The whole point of the Fed hiking rates is to slow down the economy."

The Dow Jones Industrial Average rose 40.47 points, or 0.12%, to 33,431.44; the S&P 500 gained 2.78 points, or 0.07%, at 4,048.42; and the Nasdaq Composite dropped 13.27 points, or 0.11%, to 11,675.74.

Among the S&P's 11 major industry sectors, six ended the day higher. The commodity-linked materials sector was the biggest decliner, falling 1.7%, after China set a lower-than-expected target for economic growth this year at around 5%.

The technology sector was the top gainer, with the biggest lift from Apple, which closed up 1.9%. Other strong boosts came from Microsoft Corp, which added 0.6%, and Google parent Alphabet Inc, which rose 1.6%.

The three main U.S. stock indexes had rallied on Friday and notched weekly gains after comments from Fed policymakers calmed jitters around aggressive rate hikes.

But San Francisco Federal Reserve Bank President Mary Daly said on Saturday that if inflation and labor market data continue to come in hotter than expected, interest rates would need to go higher and stay there longer than Fed policymakers had projected in December.

Investors will look for clues about the Fed's future rate hiking path when Powell testifies before Congress on Tuesday and Wednesday. Since Powell last spoke strong economic data and hotter than expected inflation have raised concerns the Fed will raise rates higher than expected or keep them higher for longer.

Traders expect at least three more 25-basis-point hikes this year and see interest rates peaking at 5.44% by September from 4.67% now.

Shares of cryptocurrency-related companies were volatile after Silvergate Capital Corp pulled the plug on its crypto payments network and raised doubts about the company's ability to stay in business. Silvergate shares closed down 6.2% while crypto bank peer Signature Bank fell 2.5%.

Declining issues outnumbered advancers on the NYSE by a 1.69-to-1 ratio; on Nasdaq, a 1.94-to-1 ratio favored decliners.

The S&P 500 posted 20 new 52-week highs and one new low; the Nasdaq Composite recorded 85 new highs and 92 new lows.

On U.S. exchanges 10.57 billion shares changed hands compared with the 10.98 billion moving average for the last 20 sessions.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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    ·2023-03-07
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