U.S. equities drifted sideways on Monday in a quiet, pre-holiday session ahead of the long Easter weekend.
In the end, the Dow Jones Industrial Average gained 0.1%, the S&P 500 saw a bump of 0.1%, the Nasdaq Composite wafted up 0.3% and the Russell 2000 lost 0.3%. Treasury bonds were weaker, the dollar was higher, gold lost 0.8% and crude oil gained 1.2% to close at $39.91 a barrel.
Defensive telecom stocks led the way with a 0.6% gain followed by healthcare, which rose 0.5%. Paint maker The Valspar Corp (NYSE:VAL) surged 23.1% after being acquired by Sherman-Williams Co (NYSE:SHW) for a 35% premium to Friday’s close in a deal valued at $11.3 billion. Materials and energy stocks were the laggards, down 0.5%. United States Steel Corporation (NYSE:X) dropped 3.9%
Apple Inc. (NASDAQ:AAPL) finished with a small loss after trading with a gain of nearly 2% intraday after the debut of a new 4-inch iPhone was met with a collective shrug. Sure, the iPhone SE is faster and has a nice camera and comes in Rose Gold. But at this point, with the smartphone market so saturated and improvements becoming so incremental, nobody really cares anymore.
AAPL shares are still up more than 15% from their January low on hype the iPhone 7 release later this year will be better received.
There were some hawkish comments from Federal Reserve officials today — which stood in contrast to the “dovish hold” at least week’s policy meeting that halved the official interest rate hike forecast to two quarter-point moves this year.
San Francisco Fed President John Williams said that if the economic data continues as he expects, then April or June could be potential times for another rate hike. Atlanta Fed President Dennis Lockhart believes the data justifies “a further step at one of the coming meetings, possibly as early as the meeting scheduled for the end of April.”
And on the economic front, existing home sales disappointed in February falling 7.1% month-over-month in a result that was well below expectations.
Technically, stocks are contending with epic overhead resistance near Dow 18,000 that stretches all the way back to 2014. Yet the major catalyst that’s powered stocks higher out of the January-February lows — the specter of an OPEC/Russia supply freeze deal — has yet to come to fruition on lingering issues with returning Iran to its pre-sanctions output level.
Moreover, the sellers are coming back in, with breadth narrowing as a growing number of stocks are sold off. There were just 18 net advancing issues on the NYSE Monday — well off of the 2,000+ results seen earlier in the month.
With stocks severely overbought, now is the time to book profits, move to cash and prepare for a pullback from here. Edge Pro subscribers are already up more than 40% in their April $560 puts against Amazon.com, Inc. (NASDAQ:AMZN).
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