S&P 500, others start the week with gains

US stocks began the week with a rally, building on last week’s gains as investors took advantage of beaten-down technology shares and stable interest rates. On Monday, the Nasdaq Composite and S&P 500 rose 0.9% and 0.7%, respectively, while the Dow Jones Industrial Average climbed 157 points or 0.5%. The technology sector’s gains were led by Apple, which jumped over 3% following Goldman Sachs’ buy rating initiation. The company accounts for around 7% of the S&P. Alphabet, Meta Platforms and Netflix also rose by roughly 2% each, boosting the tech-heavy index.

Interest rates stabilised, with the yield on the 10-year Treasury note trading flat after briefly rising above the 4% mark at various points last week. An upward move would raise borrowing costs for consumers and could signal a decline in investor confidence.

Last week, the S&P flirted with its 200-day moving average, a key momentum indicator that traders watched closely. A dip below that level could signal more selling ahead. Keith Lerner, Co-CIO at Truist, stated that the current rally is due to follow-through momentum from last week’s rally, led by growth areas that are more sensitive to interest rates.

This week’s critical catalysts include Federal Reserve Chair Jerome Powell’s congressional testimony on Tuesday and Wednesday, where he will provide guidance to investors and lawmakers on how the central bank is handling inflation and its rate-hiking campaign moving forward. Additionally, traders await the February jobs report on Friday, with economists polled by Dow Jones expecting 225,000 jobs to be added last month, following January’s blockbuster report, which showed the economy adding 517,000 payrolls.

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