S&P 500 falls as higher rates rattle investors to start the week – CNBC

The Dow moved to trading positive, erasing a loss of more than 240 points earlier in the day.

The 30-stock index traded up about 0.1%, or 20 points, around 2:20 p.m. It previously hit a session low of 0.7% down, which equates to 242.43 points.

Meanwhile, the S&P 500 and Nasdaq Composite remained in the red.

The Dow performed the best of the three averages Monday, trading down just 0.1% around 1:30 p.m. It had fallen more than 240 points, or 0.7%, earlier in the session.

Buoying the 30-stock index was Caterpillar, Travelers Companies, McDonald’s, Merck and UnitedHealth, which all gained more than 1% in the session. One-third of the stocks in the index traded up.

But laggards kept the index below the flatline. Intel dragged the most with a 3.2% loss. Walgreens traded down about 2%, while Cisco, Apple and Nike all shed more than 1.5%.

All 11 sectors within the S&P 500 traded in the red Monday.

Communication service and materials posted the biggest losses at 1.3% each.

Consumer staples and utilities performed the best, with each down just 0.1%.

— Alex Harring

A shortfall in active riders could weigh on Lyft’s growth, according to Gordon Haskett.

The firm downgraded the riding sharing company’s shares on Monday to hold and lowered its price target from $24 to $29.

“Beyond concern about an active rider shortfall and likely downward top- and bottom-line revision to 2023 and 2024 earnings estimates, we’ve become increasingly concerned about Lyft’s (1) ability to sustain [low double digit percentage] higher pricing relative to Uber, which we believe has been a contributing factor behind improving wait times and (2) predominantly US-based business model given what we expect will be a turbulent U.S. regulatory environment in the months/quarters ahead,” Robert Mollins, an analyst at Gordon Haskett, said in a note.

He added that the firm favors Uber, even though it sees a challenging regulatory environment, due to Uber’s “geographically diverse business mode as a partial shield against possible unfavorable rulings in the U.S.”

— Tanaya Macheel

These stocks are among those making the biggest moves in midday trading today:

• On Semiconductor — Shares gained more than 1% after the company reported earnings Monday that beat Wall Street estimates. The company posted $2.1 billion in revenue for the quarter, a 13.5% increase from $1.85 billion in revenue last year.
• Dell — The tech company saw its shares fall 3.7% after it announced its plans to lay off 5% of its workforce. Dell co-chief operating officer Jeff Clarke said the staff cuts are an effort to “stay ahead of downturn impacts.” The company has been struggling with the global slowdown in demand for PCs and laptops during the past year.
• Energizer Holdings — The battery maker’s stock price lost 8.5% after fourth-quarter revenue and earnings fell short of expectations.. The company reaffirmed earnings per share and revenue growth guidance for the full year.
• Catalent — Shares of the contract manufacturer surged 20.4% following a Bloomberg News report showing Danaher has expressed interest in taking over the company. Shares of Danaher lost 1%. 

Click here to see more stocks making midday moves.

— Pia Singh

Bond yields rose while stocks fell in Monday trading. Sylvia Jablonski, CEO of Defiance ETFs, said the inverse relationship could reverse, but investors should still expect volatility in the short term.

“There’s a little bit of a disconnect right now in in both markets,” Jablonski said in an interview with CNBC. “A lot of it just lays on the uncertainty of: unemployment remains low, but inflation has also come down, but the Fed’s not at the 2% target.”

— Alex Harring

Bernstein is getting bullish on Diageo.

Analysts Trevor Stirling upgraded the Johnnie Walker and Ketel One parent to outperform from market perform. He also hiked his price target on the company’s U.S.-listed shares to $225 from $215. The new target implies upside of nearly 30% from Friday’s close.

“They are well-positioned to profit from the long-term structural growth in US spirits and have great momentum in emerging markets (primarily spirits in LatAm and Asia but also in pockets of Africa). We are confident that they will hit the upper end of their long-term guidance of 5%-7% organic top-line growth, with Operating Profit growth a point ahead,” Stirling said in a Monday note.

CNBC Pro subscribers can read more about his upgrade here.

— Hakyung Kim

Treasury yields jumped on Monday as investors awaited clues from Federal Reserve speakers on the next steps for monetary policy.

The yield on the 1-year T-bill leapt as high as 4.841% Monday morning, and the rate on the 2-year note jumped to 4.412%. These are the highest levels since Jan. 6. Yields on longer-dated Treasurys ticked higher, too, with the rate on the 10-year note climbing as high as 3.619%, the highest level since Jan. 10. Bond yields move inversely to prices.

Yields have been trending higher since the Fed embarked on its rate-hiking campaign last year, and bond prices tumbled. However, an opportunity has since opened for investors hoping to snap up these fixed-income instruments on the cheap and collect an attractive yield.

Read more on where advisors are looking to play the rising rate environment here.

-Darla Mercado, Gina Francolla

Despite the S&P 500 trading down, more stocks within it are hitting new 52-week highs than lows.

Centene hit a low not seen since December 2021 and was the sole S&P 500 to post a 52-week low early Monday.

On the other hand, three components were at highs not seen in more than a year. Regeneron and ON Semiconductor hit levels not seen since their respective initial public offerings in February 1991 and May 2000. Ametek, meanwhile, traded at a high not reached since December 2001.

Outside of the broad index, Sirius XM traded at a low last touched in September 2020.

The following four stocks hit highs not seen in at least a year:

— Alex Harring, Chris Hayes

Stocks could be due for a positive year after their strong January performance, according to CFRA.

“Since 1945, whenever the S&P was higher in January, the market posted an average price increase of 15.8% (versus the average annual gain of 8.9% for all years) and rose in price 85% of the time (compared with the more normal 71% batting average),” CFRA’s Sam Stovall wrote in a Monday note.

“And if that weren’t optimistic enough, a down year (like 2022) that was followed by positive January Barometer saw the S&P 500 gain 23% for the full year and rise in price 92% of the time,” he added.

The strategist cited the January Barometer, a technical indicator popularized by The Stock Trader’s Almanac.

To be sure, past performance may not necessarily repeat, but the strategist said “it certainly offers encouragement” to investors.

— Sarah Min

Tesla shares outperformed during early morning trading, bucking the broader market downtrend.

Shares of the electric vehicle stock were last up about 2.5% as of 10:10 a.m.

The move in shares comes as optimism and demand improves in China after the company initiated a slew of price cuts targeting some of its best-selling models.

Given this backdrop, Wedbush’s Dan Ives upped his price target on shares to $225 from $200, implying more than 18% upside for the stock from Friday’s close. The electric vehicle maker also got a price target increase from RBC Capital Markets to $223 from $186 a share, citing the positive price cut response.

“The macro remains uncertain and a recession could likely be on the doorstep, however Tesla is now positioned well with its price points with demand outstripping supply so far in 2023,” Ives wrote.

So far this year Tesla shares have been on a tear, up nearly 57% after plummeting 65% during 2022’s market rout. In January, shares posted their best week in over a decade.

Shares for Disney could see big gains going forward, according to Morgan Stanley.

Analyst Benjamin Swinburne reiterated his overweight rating on Disney ahead of its earnings announcement on Wednesday. He also noted that his bull case scenario is now in play after the stock’s hot start to 2023.

Morgan Stanley has a bull case price target of $150 per share on Disney, which implies upside of 36.1% from Friday’s close. The bank’s base case target is $115, which points to upside of just 4.5%.

CNBC Pro subscribers can read more about the analyst’s forecast here.

The three major indexes were down as trading kicked off Monday.

The Dow lost 87 points, or 0.3%. Meanwhile, the S&P 500 and Nasdaq Composite dropped 0.4% and 0.6%, respectively.

— Alex Harring

While Adidas, Under Armour and Wolverine World Wide are fresh picks, investors should take some caution on these stocks after their recent rally, according to Baird.

The investment firm took “cautious trading calls” on those apparel brands through July, ahead of calendar second quarter reporting, according to a Sunday note. The firm said positive sentiment is more than baked into the stocks following raised investor hopes of a Fed pivot.

“While cycling prior-year headwinds should help earnings, back-weighted consensus projections may prove unattainable in the event of any economic softening (our C2023E EPS remains ~15% below consensus),” analyst Jonathan R. Komp wrote.

The apparel stocks have surged in 2023. Shares of Adidas jumped 27% this year, while Under Armour is more than 24% higher, as of Friday’s close. Meanwhile, Wolverine World Wide shares soared more than 48%. Those rallies raise the risk of future downside for these names, according to the analyst.

“Valuation no longer provides significant margin for error, and we are signaling a more cautious stance on stocks with high operating leverage and/or questionable balance sheet/inventory health,” Komp wrote.

— Sarah Min

SVB MoffettNathanson moved to the sidelines on T-Mobile amid what the firm sees as the toughest backdrop ever for telecommunication growth.

Analyst Craig Moffett downgraded the stock to market perform from outperform and set a price target of $174. That price target still implies the stock could rally 19.8% from where it closed Friday. Before the downgrade, he recommended T-Mobile shares since 2012, when the only way to invest in the company was through purchasing MetroPCS in anticipation of a merger.

Moffett said the company still has a good valuation coming off “dramatic” outperformance in 2022, when the stock gained 20.7% despite the broader market decline. But he said the sliding growth outlook for the industry has made it hard to stay bullish on the stock.

“Throughout that decade-plus stretch, we’ve described T-Mobile as the best house on a bad block,” Moffett said in a note to clients Monday. “Our relatively bearish view of the wireless industry notwithstanding, we’ve always viewed T-Mobile’s combination of improving network, lowest prices, and modest valuation as too compelling to pass up. Until now.”

T-Mobile shares fell 2.2% in premarket trading Monday.

He’s isn’t optimistic about competitors either, noting that growth among the “Big Three” telecommunication companies will be “harder to come by than ever,” even if the companies expect differently. SVB MoffettNathanson also has a market perform rating for Verizon, while placing AT&T at underperform.

“We see a growing mismatch between industry growth rates and company expectations, not just for T-Mobile, but for all of the Big Three,” he said.

These are some of the stocks moving the most before the bell.

Tyson Foods – Shares of the food processing giant suffered a 6% drop in premarket trading after the company reported weaker-than-expected results for the first quarter. Tyson Foods missed estimates on both the top and bottom lines.

PayPal — Shares of the payments company fell 2.6% in premarket after Raymond James downgraded the stock to market perform from outperform.

Children’s Place — The children’s apparel retailer shed more than 16% after management cuts its outlook for the fourth quarter as it deals with a difficult macro environment. 

Read the full list of stocks moving the most before the bell here.

— Samantha Subin

The S&P 500 has moved near 4,200 points in recent days. It likely won’t stay there, according to Jonathan Krinsky, chief market technician at BITG Research.

“After a 20% rally off the intraday lows of October, we expect 4,200 to act as formidable resistance and see the SPX turning lower from here,” he said in a note to clients Monday.

Krinsky added that the index has posted one of its largest volumes in the last three years. Last week, the index reached a five-month high.

Adam Crisafulli of Vital Knowledge noted Monday morning that a drastic change in the market’s narrative on the economy is pressuring futures to start the week.

“The narrative has evolved from “hard landing” (in place for most of Q4) to “soft landing/goldilocks” (in place for most of Jan) to “no landing” (currently in place),” he said in a note. “This, along with the attendant hawkish implications for monetary policy and inflation, coupled with the removal of the large positioning tailwind that helped propel prices higher throughout the year… is contributing to the equity pullback.”

“It’s very notable how NO ONE is defending the tape – all the stubborn bears who missed the recent advance are rushing out negative missives, blaming the YTD rally on nothing more than the ‘January Effect’, ‘forced CTA buying’, ‘0DTE options trading’, etc., and predicting a rapid return to ~3800 (or worse),” he said.

Wall Street is coming off a strong weekly performance, with the Nasdaq Composite notching a five-week winning streak. The S&P 500, meanwhile, posted its fourth weekly gain in five weeks.

— Fred Imbert, Michael Bloom

The halfway point to earnings season was hit on Friday morning, with exactly 250 S&P 500 companies having reported now.

In the week ahead, 89 companies in the S&P 500 companies are set to report along with one Dow component also headlining earnings this week: Disney.

Aside from Disney, investors will also get an early look at the retail scene from a few apparel companies, including Under Armour, Ralph Lauren and VF Corp., the parent of brands like Vans, The North Face, Timberland, and Dickies.

Chipotle and Yum will shed light on fast food spending following McDonald’s strong report. Additionally, Hilton, Expedia, Royal Caribbean – as well as Uber, Lyft and Hertz – will give traders a view on travel spending.

— Robert Hum, Tanaya Macheel