Nasdaq up 2% on last day of volatile month

  • Tesla and Netflix jump on ratings upgrade
  • S&P 500, Dow eye worst month since March 2020
  • Citrix lands on $16.5 billion deal to take it private
  • Indices up: Dow 0.06%, S&P 0.76%, Nasdaq 1.99%

Jan 31 (Reuters) – The tech-heavy Nasdaq rose nearly 2% on Monday but was still on course for its worst start to the year as investors shunned high-valuation stocks amid rising aggressive rate hikes and geopolitical tensions.

Valuations of growth and technology stocks have come under increasing scrutiny, with the Nasdaq (.IXIC) down 10.4% so far this month.

Six of the 11 major S&P sectors gained, led by a rise in technology stocks (.SPLRCT) and consumer discretionary (.SPLRCD).

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“Today’s and Friday’s bounce are just some of the institutional guys saying the Nasdaq needed to be rebalanced at the end of the month,” said Lindsey Bell, chief investment strategist at Ally Invest, in Charlotte, North Carolina.

“It’s just a small relief rally after such a sharp selloff.”

Tesla Inc (TSLA.O) jumped 8.9% after Credit Suisse raised the rating of the electric car maker’s shares to “outperform”, while Netflix Inc jumped 8.4% after Citigroup a upgraded the streaming company’s stock to “buy”.

The S&P 500 Barometer (.SPX) has fallen 6.5% so far this month and is on track for its worst month since the pandemic-induced crash in March 2020.

“The January barometer, which says ‘as January goes, so the year goes’, will be negative, implying investors are in for a tough year,” said Sam Stovall, chief investment strategist at CFRA Research.

The US Federal Reserve announced last week its intention to tackle high inflation for four decades by raising key interest rates more aggressively than many market participants had expected. Read more

Fed funds futures traders predict nearly five rate hikes by the end of the year, with some banks, like the Bank of America, now eyeing seven hikes this year. Read more

Geopolitical tensions have added to market uncertainty, with the United States and its allies threatening Russia with new economic sanctions if it attacks Ukraine. Read more

As of 11:33 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 20.69 points, or 0.06%, at 34,746.16, the S&P 500 (.SPX) was up 33.76 points, or 0.76%, to 4,465.61, and the Nasdaq Composite (.IXIC) rose 274.59 points, or 1.99%, to 14,045.17.

Bank stocks (.SPXBK) fell 0.5% as a widely watched section of the U.S. Treasury yield curve, a gauge of economic expectations, flattened to its lowest levels since October 2020.

The fourth quarter earnings season continues with megacaps such as Google parent Alphabet Inc (GOOGL.O), Amazon Inc and Meta Platforms Inc (FB.O) expected to report later this week, following strong results from Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) this month.

On Friday, a third of S&P 500 companies posted profits, and 77.4% of them beat analysts’ expectations, according to Refinitiv.

Spotify Technology (SPOT.N) rose 11.8% after Citigroup upgraded the music streaming company’s stock to “buy”. Read more

Shares of Citrix Systems Inc (CTXS.O) fell 3.8% after the software company announced it had agreed to be taken private for $16.5 billion, including debt from its subsidiaries. ‘Elliott Management and Vista Equity Partners. Read more

Advancing issues outnumbered decliners for a 1.94-to-1 ratio on the NYSE and a 2.97-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and no new lows, while the Nasdaq recorded 16 new highs and 35 new lows.

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Reporting by Bansari Mayur Kamdar and Medha Singh in Bengaluru; Editing by Shounak Dasgupta

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