Stocks experienced a positive uptick on Monday, following notable rallies in Asian markets earlier in the day. The Standard & Poor’s 500 index advanced by 0.5%, inching closer to its all-time high recorded two weeks ago. Meanwhile, the Dow Jones Industrial Average saw a slight increase of less than 0.1%, and the Nasdaq composite gained 0.9%.
These modest gains came on the heels of a robust 3.9% jump in Japan’s Nikkei 225 index, which reached a new record. The surge in Japanese stocks followed a decisive victory for the ruling political party in parliamentary elections, bolstering expectations that Prime Minister Fumio Kishida’s administration will gain the necessary political leverage to implement reforms aimed at stimulating economic growth.
In the U.S., the stock market was buoyed by its best performance since May the previous week, but several uncertainties linger. Critics have voiced concerns about valuations, suggesting that stocks may have become overly expensive following their recent highs. Additionally, there are significant apprehensions regarding whether substantial investments by major technology firms in artificial intelligence will yield sufficient returns to justify the expenditures.
On Monday, shares of technology companies that have benefitted from the AI boom were significant contributors to market gains. Chipmakers excelled, with Nvidia climbing 2.4% and Broadcom gaining 3.3%, both of which were key drivers of the S&P 500’s ascent. Other notable performers included Kroger, which surged 3.9% after announcing the appointment of a former Walmart executive as its new CEO. Transocean rebounded from earlier losses, rising 5.9% following the announcement of its acquisition of Valaris in an all-stock deal valued at $5.8 billion, with Valaris’ shares soaring by 34.3%.
Conversely, Hims & Hers faced a significant setback, witnessing a 16% drop in its stock price after Novo Nordisk filed a lawsuit alleging the company was illegally selling versions of its weight-loss treatments. This lawsuit coincides with recent FDA actions to restrict access to key ingredients used in popular weight-loss drugs. In a statement via social media, Hims & Hers criticized the pharmaceutical giant for “weaponizing the US judicial system to limit consumer choice.” In contrast, Novo Nordisk’s stock rose by 3.6%. Additionally, Workday’s stock declined by 5.1% after announcing that CEO Carl Eschenbach would step down, with co-founder Aneel Bhusri returning as the leader.
Overall, the S&P 500 closed with an increase of 32.52 points at 6,964.82. The Dow added 20.20 points, finishing at 50,135.87, while the Nasdaq composite saw a gain of 207.46 points, ending the day at 23,238.67.
In the bond market, Treasury yields remained stable leading up to key economic reports expected later in the week. The U.S. government plans to release its monthly job market assessment on Wednesday, followed by an update on consumer-level inflation on Friday. These reports could significantly influence expectations regarding the Federal Reserve’s interest rate decisions. While the Fed has maintained its current interest rate, a deteriorating job market might prompt quicker cuts, whereas persistently high inflation could delay any reductions.
Currently, the yield on the 10-year Treasury note eased to 4.20%, down from 4.22% late last week. Other markets, previously characterized by volatility, showed signs of recovery or stability, with gold prices rising 2% to settle at $5,079.40 per ounce. Silver prices surged by 6.9% following the trend. Meanwhile, Bitcoin traded just below $71,000 after briefly surpassing that mark over the weekend, a significant recovery from a drop to near $60,000 the previous week.
In international markets, major indexes in Asia experienced gains led by Japan’s performance. South Korea’s Kospi rose by 4.1%, Hong Kong’s stocks increased by 1.8%, and Shanghai’s market saw a 1.4% hike. Business activity in Europe was more subdued, with Germany’s DAX gaining 1.2% and France’s CAC 40 up by 0.6%.
