On Monday, the S&P 500 edged down 0.1% as investors braced for a busy week of earnings reports and inflation data. The Dow Jones Industrial Average, however, rose 222 points, or 0.4%, while the Nasdaq Composite slipped 0.3%. Micron Technology shares fell 4%, pressured by competition from China's CXMT.
Sources indicate CXMT is advancing a new chip structure, intensifying the rivalry. But the Dow got a boost from Salesforce, which saw a 2% increase after a double upgrade from Bank of America.
Oil prices climbed amid geopolitical tensions involving Russia and Ukraine. West Texas Intermediate futures rose 2%, trading near $93 per barrel, while Brent crude also gained 2%, hitting $106 per barrel.
Last week, major averages trended positively, driven by a tech stock rally that offset rising oil prices and yields. The Dow and S&P 500 both posted their second positive week in three, while the Nasdaq extended its winning streak to four weeks. Investors are hopeful that the third-quarter earnings season will sustain market momentum despite geopolitical uncertainties.
The S&P 500 is on track for a 29.6% earnings growth this quarter, marking the fourth consecutive quarter of over 25% growth. Strong AI data center buildout is a key driver. This week, earnings reports from major banks like Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo will accelerate the season.
Inflation data is also on the horizon, with the September consumer and producer price indexes due on Wednesday and Thursday. Tim Holland, chief investment officer at Orion, noted that even if inflation numbers exceed expectations, it's unlikely to alter the Federal Reserve's stance on maintaining steady interest rates.
Market Reactions and Upgrades
In market developments, AST SpaceMobile shares rose about 5% on Monday after Deutsche Bank upgraded the stock to 'buy' from 'hold', with a $93 price target. Despite a year-to-date drop of over 26%, the stock's outlook improved with the upgrade.
RBC Capital Markets cautioned of potential risks as the third-quarter reporting season nears, citing issues like the Iran conflict, possibly inflated 2027 earnings forecasts, midterm elections, and the Federal Reserve's new hiking cycle. These factors could result in a short-term dip in the S&P 500 earnings per share outlook.
Global shipping stocks reached new highs shortly after the market opened, driven by rising oil shipping prices. The Global Shipping ETF hit another all-time high, with companies like Torm PLC, Hafina, and Teekay Tankers opening at fresh 52-week highs. High shipping costs, amid ongoing Middle East tensions, are adding premiums to oil prices.
U. S. equities held relatively steady on Monday morning. The S&P 500 inched up 0.1% shortly after the market opened, while the Dow Jones Industrial Average gained 83 points, or about 0.2%. The Nasdaq Composite slipped 0.1%.
Starbucks shares rose over 1% in premarket trading after the company dismissed rumors of a Chipotle Mexican Grill takeover. A Starbucks spokesperson confirmed the company isn't pursuing a purchase of Chipotle, leading to a more than 2% drop in Chipotle shares.
Bank of America also upgraded Salesforce, citing the company's integration of artificial intelligence. The bank raised Salesforce's price target to $285 from $160, projecting a 24% increase from its last closing level. Salesforce shares have pulled back about 14% this year, mainly due to concerns that widespread AI adoption might lessen demand for software tools.
