S&P 500 rises and Meta jumps as investors eye midterms

view original post

By Noel Randewich and Amruta Khandekar

© Reuters/BRENDAN MCDERMID Traders work on the floor of the NYSE in New York

(Reuters) – The S&P 500 rose on Monday as investors focused on Tuesday’s midterm elections that will determine control of Congress, while shares of Meta Platforms jumped on a report of job cuts at the Facebook parent.

Republican candidates have picked up momentum in polls and analysts expect a split government, with the GOP winning the House of Representatives and possibly the Senate, as the likely outcome possibly hindering Democratic President Joe Biden’s agenda.

“The likelihood that the Republicans take the House or the Senate is pretty high, therefore guaranteeing some form of gridlock over the next couple of years. That would probably take tax hikes off the table, and any sort of big spending potentially perceived as inflationary off the table,” said Ross Mayfield, an investment strategy analyst at Baird.

© Reuters/BRENDAN MCDERMID Traders work on the floor of the NYSE in New York

Focus this week will also be on U.S. consumer prices data for October, due out on Thursday, for clues about how much the U.S. Federal Reserve’s rapid interest rate hikes are helping cool down the economy.

Load Error

Four Fed policymakers on Friday indicated they would consider a smaller rate hike at their next policy meeting, despite new data showing another month of robust job gains and only small signs of progress in lowering inflation.

Traders are divided about whether the Fed will raise interest rates by 50 basis points or 75 basis points at the U.S. central bank’s meeting in December.

“All else equal, whether the terminal rate sits at 4.5%, 5% or beyond, monetary policy is poised to have a negative effect on the economy heading into 2023,” Glenmede’s investment strategists wrote in a note on Monday.

All the three major U.S. indexes have slumped this year, with the tech-heavy Nasdaq down 33% due to worries that aggressive monetary policy tightening could cripple the U.S. economy.

In afternoon trading, the S&P 500 was up 0.29% at 3,781.54 points.

The Nasdaq gained 0.03% to 10,478.70 points, while the Dow Jones Industrial Average was up 0.84% at 32,675.85 points.

S&P 500 by market cap https://fingfx.thomsonreuters.com/gfx/mkt/akveqgwaxvr/SPX_by_marketcap.png

Meta Platforms Inc jumped 4.6% following a report that the company was planning to begin large-scale layoffs this week. The stock has slumped more than 70% so far this year.

Weighing on the tech-heavy Nasdaq, Apple Inc fell about 1% after the company said it expected lower shipments of premium iPhone 14 models than previously anticipated.

Digital World Acquisition Corp surged 44% after former U.S. President Donald Trump hinted at another White House bid. The blank-check firm has agreed to take social-media startup Trump Media & Technology Group Corp public.

Walgreens Boots Alliance Inc gained 3.8%% after VillageMD, a primary care provider backed by the pharmacy chain, said it will acquire Summit Health in a deal valued at nearly $9 billion.

Of the 11 S&P 500 sector indexes, eight rose, led by energy, up 1.51%, followed by a 0.95% gain in communication services.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.4-to-one ratio.

The S&P 500 posted 15 new highs and 15 new lows; the Nasdaq recorded 63 new highs and 180 new lows.

(Reporting by Shubham Batra and Amruta Khandekar in Bengaluru, and by Noel Randewich in Oakland, Calif.; Additional reporting by Shreyashi Sanyal and Devik Jain; Editing by Maju Samuel and Chizu Nomiyama)

Continue Reading