U.S. stocks rose on Monday, with the Nasdaq pushing further into record territory as investors continued to cheer last week’s jobs data, which combined solid jobs growth with a lack of wage pressure.
Friday’s labor data for February, which revealed solid jobs growth, but a smaller increase in wages. That helped to assuage some worries about the pace and intensity of Federal Reserve interest-rate hikes this year.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.06% rose 63 points, or 0.3%, to 25,400. The S&P 500 SPX, +0.11% rose 7 points, or 0.3%, to 2,794. The Nasdaq Composite Index COMP, +0.42% was up 31 points, or 0.4%, to 7,592. It hit an intraday record of 7,592.96 in early trading, and is on track for its seventh straight positive session.
Gains were broad, with 10 of the 11 primary S&P 500 sectors higher on the day. The industrial sector was the only negative group on the day, off 0.1%. Consumer discretionary stocks were the day’s biggest outperformers, up 0.7%.
The major indexes are coming off a weekly gain of more than 3%. On Friday, the Dow surged 1.8%, marking the first time the blue-chip index has finished above 25,000 since Feb. 28. The S&P 500 index rose 1.7%, tied for its biggest one-day percentage gain of 2018. The Nasdaq climbed 1.8%.
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What could drive the markets?
With nothing major on the economic data calendar, the market’s focus will likely remain on last week’s so-called Goldilocks jobs numbers. The nonfarm-payrolls report Friday showed 313,000 jobs were created in February, better than expected—but wage growth came in below expectations.
Investors have feared that a tighter labor market could lead to higher inflation on the side of wages, and more pressure from the Fed to pick up the pace of its interest-rate hikes. More interest-rate hikes than the market expects could damp enthusiasm for stocks.
Friday’s data and reaction was a marked difference from January jobs data released early last month, when a jump in hourly earnings growth sparked a selloff for stocks that morphed into the first correction in roughly two years. A correction is defined as a drop of 10% or more for stocks.
Investors will get a second indication of inflation this week, with an update on consumer prices due Tuesday. As well, retail sales are scheduled for release on Wednesday.
On Monday, just the Federal budget for February is due at 2 p.m. Eastern.
Read:The stock market will remain glued to the inflation story
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What are strategists saying?
“The underlying macroeconomic backdrop is still pretty intact, and stocks continue to be supported by good earnings,” said Michael Mullaney, director of global markets research at Boston Partners.
“Rates and inflation are still the big question market, and they’re by far our biggest risk factors for 2018. We don’t know the trigger point, where bond yields will start to wreck havoc on stocks, but last week’s average hourly earnings number gave us some comfort that we’re not there yet.”
Which stocks are in focus?
Shares of Oclaro Inc.OCLR, +27.13% jumped 26% after Lumentum Holdings Inc.LITE, +7.50% said it would acquire the optical components company in a deal valued at $1.8 billion. Shares of Lumentum were up 4.3%.
Goldman Sachs Group Inc. GS, +1.05% rose 0.6% after the company said that Harvey Schwartz, its co-chief operating officer and president, was set to retire, leaving David Solomon to serve as sole COO and president. The move appears to put the company’s succession plans in focus after The Wall Street Journal on Friday reported that Goldman CEO Lloyd Blankfein was set to retire as early as the end of 2018.
Dow Chemicals leader Andrew Liveris plans to step down at the end of the month. Co-lead director Jeff Fettig will assume that role at the company, now known as DowDuPont Inc. DWDP, +0.21% and soon to be broken apart. Shares of the DowDuPont were up 0.5% in premarket trade.
Biogen Inc. BIIB, -1.15% said Monday it reached a deal to buy a phase-2b-trial-ready schizophrenia treatment from Pfizer Inc. PFE, -0.08% for up to $590 million. Shares of Biogen were down 1% while those for Pfizer were up 0.3%.
Sempra EnergySRE, -0.17% said Monday Chief Executive Debra Reed will step down as CEO on May 1, but will remain as executive chairman until she retires on Dec. 1, 2018 after over 40 years with the company. Shares of the company little changed.
Shares of Broadcom Ltd. AVGO, +2.76%rose 3.5% on Monday, after the Singapore-based semiconductor company said it expects to complete the redomicilation to the U.S. by April 3, 2018.
What are other assets doing?
Keying off Wall Street’s gains last week, European stocks SXXP, +0.26% opened higher, while Asian markets got off to a strong start.
Across other assets, ICE U.S. Dollar Index DXY, -0.08%was pulling back some, specifically against the Japanese yen USDJPY, -0.26% Gold prices GCJ8, -0.50%were modestly lower. Oil prices CLJ8, -1.24% were also drifting lower.
Read:OPEC unity is splitting over differing views on oil prices
The yield on the 10-year U.S. Treasury TMUBMUSD10Y, -0.19% was up less than a full basis point at 2.901%
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