The stock market experienced a rollercoaster on Monday, spending time on either side of the unchanged mark. With earnings season starting to heat up, investors struggled to find direction, with the major averages eventually ending with slight losses.
A rally into the close allowed the major averages to significantly cut their losses. Looking at the day’s closing numbers, the Nasdaq still posted a loss of 18.72 points, ending the session at 13,332.36. The Dow dipped 39.54 points to finish at 34,411.69.
The S&P 500 almost pushed back into positive territory going into the close but fell 0.9 of a point short. The index concluded trading at 4,391.69.
Five of the 11 S&P sectors finished in the green. Energy led the way, rising by 1.5%. Health Care was the biggest decliner on the session, dropping by 1.1%.
“Bulls are leaving the building,” Schwab’s Liz Ann Sonders tweeted, noting that AAII Sentiment bullish share “has dropped to 15.8%, lowest since September 1992.” That’s often seen as a contrarian indicator, though.
In another comment on economic outlook, Goldman Sachs says it now sees a 35% chance of a U.S. recession in the next two years.
Turning to the bond market, yields saw upward pressure. The 10-year Treasury yield rose 5 basis point to 2.86% and the 2-year climbed 2 basis point to 2.47%.
“Recession risks are more limited in 2022 but rise significantly by mid-to-late 2023,” Citi said. “Equity markets have begun pricing this in already, but we expect fallout to be felt mostly in 1H ’23.
The firm added: “A -10% hit to earnings and a two multiple turn lower on the SPX imply risk to 3650. Relative to previous recessions, we expect market response to be earlier on both the way in and out.”
Bank of America posted solid earnings before the bell. The stock was sluggish in early trading but built a gain of about 3% as the closing bell approaches.
Morgan Stanley says there are already worrying signs about this earnings seasons, especially with guidance.
Twitter jumped almost 8% and remains in focus as well, especially if Elon Musk has any more tweets about what his next move might be.
See the other stocks making big moves on the day.