S&P 500 jumps as bets on less hawkish Fed fuel tech rally

By Yasin Ebrahim

Investing.com -- The S&P 500 gave up gains Monday, as value sectors of the market including financials partly offset tech strength as Treasury yields continued to slip amid ongoing expectations that the Federal Reserve will slow its pace of rate hikes.  

The S&P 500 rose 0.05%. The Dow Jones Industrial Average fell 0.25%, or 83 points, and the Nasdaq Composite was up 0.8%. 

Financials and health care weighed on the broader market, with the latter hurt by a fall in DexCom (NASDAQ:DXCM), Baxter International Inc (NYSE:BAX), and Regeneron Pharmaceuticals Inc (NASDAQ:REGN), which fell more than 7% after reporting lower sales of its Eylea treatment. 

The U.S. 10-year Treasury yield fell to its lowest level in three weeks - extending its move lower from Friday, when the December jobs report showed cooling wage pressures – helping rate-sensitive sectors include tech flourish, as investors continued to price in a less hawkish Fed.

Fed funds futures showed bets on the peak level of rates slipped below 5% from a week ago.

Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL) led the gains in tech, while semiconductor stocks were lifted by a more than 7% rise in NVIDIA (NASDAQ:NVDA) following a slew of positive remarks from Wall Street.

Nvidia was named as a top pick by Wells Fargo amid expectations for the chip industry downturn to bottom in the first half of the year. Credit Suisse said Nvidia remained its top pick “on the basis of derisked gaming and catalysts from Grace/Hopper [superchip] this year.”

Broadcom (NASDAQ:AVGO) fell 1% after Apple said it aims to drop the use of Broadcom chips in its devices by 2025, Bloomberg reported.

Tesla (NASDAQ:TSLA), meanwhile, led consumer discretionary stocks higher to extend its rebound following its plunge to fresh 52-week lows last week.

Neuberger Berman senior research analyst Daniel Flax said Monday he would be a “buyer of Tesla at current levels," describing the EV maker’s business model as “powerful” as it enables new services like self-driving to be delivered.

Cruise stocks were also involved in the heavy lifting for consumer stocks and continued to rack up gains, with Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) and Carnival Corporation (NYSE:CCL) up more than 6% and 3%, respectively.

Energy, however, traded flat even as ongoing demand optimism from China’s reopening and weaker dollar helped pushed oil prices higher.

Lululemon Athletica (NASDAQ:LULU), however, failed to participate in the rally, falling more than 9% after cutting its guidance on margins amid rising costs.

The company expects gross margins to fall 90 basis points to 110 basis points, compared with prior guidance of an increase of 10 basis points to 20 basis points.

In other news, Bed Bath&Beyond (NASDAQ:BBBY) rallied 22% just ahead of the home goods retailer’s quarterly earnings report which is expected to show a loss of $2.38 on revenue of $1.33 billion.  

In cryptocurrency news, bitcoin rose more than 1% hitting a more than three-week high, sending crypto-related stocks including Marathon Digital Holdings Inc (NASDAQ:MARA), Coinbase Global Inc (NASDAQ:COIN), and Riot Blockchain (NASDAQ:RIOT) sharply higher.