What you need to know…
The S&P 500 Index ($SPX) (SPY) on Monday closed up +1.86%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.98%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.68%.
U.S. stock indexes Monday posted moderate gains. Bank stocks led the overall market higher Monday after JPMorgan Chase CEO Dimon said “storm clouds” over the U.S. economy may dissipate.
Signs of increased M&A activity were also positive for the overall market after Bloomberg News reported that Broadcom is in talks to acquire VMware. In addition, stocks rallied Monday on the prospects of easing global trade tensions after President Biden said he would reconsider the tariffs on Chinese imports imposed by the Trump administration.
A -4% decline in Autodesk Monday limited gains in the Nasdaq 100 after Deutsche Bank cut its recommendation on the stock. Concern that the pandemic in China may be spreading is negative for stocks as an increase in Covid infections may prompt the Chinese government to extend lockdowns that worsen the global supply chain. Beijing reported a record number of new Covid infections for its latest outbreak, reviving concern the government may impose broader lockdowns to contain the spread.
Atlanta Fed President Bostic said he's comfortable with 50 bp interest rate hikes in the next couple of FOMC meetings, but he's open to moving more aggressively "if inflation on a month-to-month basis is not falling."
The U.S. Apr Chicago Fed national activity index rose +0.11 to 0.47, weaker than expectations of 0.50.
Today’s stock movers…
Bank stocks and credit-card issuers rallied Monday and supported gains in the overall market after JPMorgan Chase CEO Dimon said the U.S. economy is strong and that “credit looks really good, we’ve never seen it this good.” JPMorgan Chase (JPM) closed up more than +6% to lead gainers in the Dow Jones Industrials after raising its estimate for full-year net interest income, excluding its market business, to $56 billion from a previous estimate of $53 billion.
Other bank stocks and credit card issuers are also moved higher Monday, with Citigroup (C) closing up more than +6%. Also, Bank of America (BAC), Comerica (CMA), and Wells Fargo (WFC) closed up more than +5%, and Capital One Financial (COF), Discover Financial Services (DFS), and Visa (V) closed up more than +4%,
Software stocks moved higher Monday, led by a surge of more than +24% in VMware (VMW) after Bloomberg reported that Broadcom is in talks to acquire the company. Oracle (ORCL), Splunk (SPLK), and Check Point Software Technologies (CHKP) all closed up more than +1%.
Apple (AAPL) closed up more than +4% Monday on bargain hunting after the stock dropped to a 13-month low last Friday.
Vertex Pharmaceuticals (VRTX) closed up more than +3% Monday after SVB Financial reinstated coverage of the stock with a recommendation of market perform and a price target of $265.
Autodesk (ADSK) closed down more than -4% Monday to lead losers in the S&P 500 and Nasdaq 100 after Deutsche Bank cut its recommendation on the stock to hold from buy.
Broadcom (AVGO) closed down more than -3% Monday after CFRA downgraded the stock to buy from strong buy, saying the company’s deal to buy VMware “would further leverage Broadcom’s balance sheet.”
Dow Chemical (DOW) closed down nearly -1% Monday to lead losers in the Dow Jones Industrials after Piper Sandler cut its recommendation on the stock to neutral from overweight.
Across the markets…
June 10-year T-notes (ZNM22) on Monday closed down by -17.5 ticks, and the 10-year T-note yield rose +8.5 bp to 2.866%. Jun 10-year T-note futures Monday posted moderate losses as a rally in equities reduced the safe-haven demand for government debt. T-notes also had carry-over pressure from a jump in the 10-year UK gilt yield to a 2-week high Monday of 1.978%. An increase in supply pressures is a negative factor for T-notes as the Treasury will auction $159 billion of T-notes and floating-rate notes this week, beginning with Tuesday’s $47 billion auction of 2-year T-notes.
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