The S&P 500 fell on Monday as the market struggled to recover from a relentless sell-off that punished technology stocks and brought the S&P 500 to the brink of a bear market.
The Dow Jones Industrial Average fell 51 points, or 0.2%. The S&P 500 fell 0.3% after the benchmark almost fell into a bear market last week before a rebound on Friday. The Nasdaq Composite fell 0.4%.
“We continue to transition through this interest rate-driven pricing revision,” said Bill Northey, senior chief investment officer at US Bank Wealth Management. “So, as the US Treasury yield curve has continued to rise in anticipation of higher realized inflation and Federal Reserve policy tightening, we have seen a steady and broad tightening in valuations of the assets that has come about in line with these growing concerns about inflation.
After a long sell-off, markets rallied on Friday, with the Dow up 466.36 points and the S&P 500 up 2.39%. The Nasdaq Composite jumped 3.82% and posted its biggest one-day gain since November 2020.
But the major averages still posted heavy losses for the week and are seeing a sharp sell-off as the Federal Reserve tries to rein in inflation with aggressive rate hikes. The Dow’s seven-week losing streak is its worst since 2001. The S&P 500 just posted its first six-week losing streak since June 2011.
The S&P 500 is 16% below its all-time high, while the Nasdaq Composite is down more than 27%.
Those losses continued on Monday as major tech names declined. Shares of Apple, which fell into a bear market at one point last week, fell 0.8%. Microsoft stock price fell 1%. Shares of Google parent Alphabet fell 1%.
Some analysts believe those declines may soon point to an attractive entry point for the broader market index, based on a long-term perspective.
“The S&P 500 is rapidly approaching a level that has historically indicated future growth concerns are priced in,” Citi analyst Scott Chronert wrote in a note.
Health stocks gained on Monday. Eli Lilly shares rose 5% after the approval on Friday of its diabetes and weight loss drug called Mounjaro by the US Food and Drug Administration. Pfizer stock price rose 1.2%, AbbVie’s share price rose 1.2%.
Meanwhile, shares of Spirit Airlines jumped 11% after JetBlue announced a public offer to acquire the airline for $30 a share.
Separately, Carvana’s share price jumped 16% after the used car company issued expectations of major core earnings in 2023 and outlined a plan to cut costs.
Despite the relentless selling, some investors say there are good buying opportunities at current levels.
“I’m not calling the bottom here, but there is an opportunity here for dollar cost averaging,” Sylvia Jablonski, CEO and chief investment officer of Defiance ETF, told CNBC. “If you have a lot of cash, you’re locking in losses due to inflation. Investing in stocks or asset classes you believe in… is the lesser of evils. Selling fatigue will subside, the market is unlikely to see the Dow and the S&P are in correction territory in six months or a year.
Retail earnings season kicks off this week with several big retailers set to report first-quarter results, including Walmart, Target and Home Depot. Elsewhere, Deere is also on deck, along with a handful of tech companies.
Investors will also be keeping an eye on this week’s retail sales data, which could give them an idea of how retailers are handling inflation, which remains near 40-year highs.