Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 26, 2023.
Brendan Mcdermid | Reuters
The S&P 500 tried to climb out of correction territory Monday as traders braced for a big week filled with a Federal Reserve rate decision, jobs report and Apple’s earnings report.
The broader index advanced 0.7%, while the Nasdaq Composite jumped 0.8%. The Dow Jones Industrial Average gained 308 points, or about 1%.
Communication services stocks outperformed, with the S&P 500 sector last up by 2%. Mega-cap tech stock stocks Alphabet and Meta Platforms were up by more than 2%, each.
Those moves come after the S&P 500 fell into correction territory last week. The broader index shed 2.5% for the week to put it down by more than 10% from its 2023 closing high. It’s off 3.2% for October, on pace for its third-straight negative month which would be its first such streak since 2020 as the pandemic struck.
S&P 500 YTD
The Federal Reserve decision looms Wednesday, when the central bank is widely expected to hold its benchmark interest rate at the same level. With surging interest rates as the main culprit of this stock market correction, investors will be hoping the Fed signals it could be done raising rates. Traders expect the Fed to be done raising rates at least for 2023.
“Whilst we have a Fed meeting, the consensus has never been clearer that they’re not going to do anything at this particular meeting, and that’ll be back to back meetings of them not raising rates,” said Art Hogan, chief market strategist at B. Riley Financial. “I think that may signal that the cycle of raising rates is over, and I think that that likely helps to sort of stop that parabolic rise we’ve seen in Treasury yields.”
“When you’re in the throes of the backup in yields, it’s hard to get excited about stocks,” Hogan added. “But I think if we see rates plateauing here for a bit that would certainly usher in some good news.”
The 10-year Treasury yield jumped above 5% to start last week, but it traded around 4.89% on Monday. Friday will bring the October jobs report with investors hoping for some slowing in the labor market that will allow the Fed to feel comfortable with staying on hold the rest of the year.
Apple will report earnings Thursday after the bell. The S&P 500’s largest member is in a correction itself, down 15% from its 52-week high.
