Stocks recovered most of their earlier losses on Monday as shares of major technology companies advanced.
The S&P 500 was up 0.1% around midday after falling as much as 0.9% to start the session. The Nasdaq Composite traded 0.7% higher and was headed for its sixth straight winning session. Earlier in the day, the tech-heavy average fell 0.8%. The Dow Jones Industrial Average traded 62 points lower, or 0.3%, after dropping more than 200 points.
Facebook rose 0.5% while Amazon, Apple, Netflix and Alphabet all traded more than 1% higher. Microsoft advanced 0.6% and Intel climbed 1.3%.
However, investors remained jittery about reopening the economy too soon, capping the market’s upside momentum.
“I think this part of the bounce was easy to forecast, I think what happens from here again depends a lot on Covid stuff,” said Paul Tudor Jones, founder of Tudor Investment Corp., on CNBC’s “Squawk Box.” “There’ll be a shift in focus from liquidity issues somewhere down the line to solvency issues. If we don’t find a vaccine or a cure, if we don’t find a much better way of testing at scale … then I think the market’s going to have a much more difficult time.”
South Korea warned of a new cluster of cases involving night clubs and the number of new coronavirus cases worldwide reached 4 million. Singapore and Japan also confirmed new cases. Stocks that would benefit the most from reopening fell including airlines, retailers, cruise lines and casinos.
The major averages were coming off their first weekly advance in three weeks, with the S&P 500 gaining 3.5% last week. On Friday, investors shrugged off the biggest one-month job losses on record.
“The world very much remains on the path to reopening, a process that will accelerate over the coming weeks,” said Adam Crisafulli, founder of Vital Knowledge, in a note. He added, however, the S&P 500 is still overbought at current levels even as expectations of a gradual resumption of economic activity continue to increase.
“There will be a reckoning around the reopening and linearity narratives (i.e. both are too sanguine right now),” Crisafulli wrote.
The S&P 500 has rallied more than 33% since hitting an intraday low on March 23. That surge has been led largely by mega-cap tech stocks such as Facebook, Amazon, Apple, Netflix, Google-parent Alphabet and Microsoft. Those stocks have all soared more than 20% since late March.
Stocks that would benefit from the economy reopening are also up sharply since then. MGM Resorts has soared more than 70% while Disney is up 27.3% in that time.
But those stocks were down Monday. Disney lost 0.9%. MGM fell 4.8%. United Airlines lost 4.1%.
Despite the market’s strong performance at the index level, Dan Russo of Chaikin Analytics thinks that under the surface, “the real story has been unfolding.”
“Over the past three months, which roughly lines up with the top in the S&P 500, it is the economically sensitive cyclical sectors of the market that have lagged,” the firm’s chief market strategist said in a post, highlighting the performance of energy, financials and industrials over that time period. All three of those sectors are down more than 24% over the past three months.
Apple said Friday it will start to reopen U.S. stores this week. The stores, Apple said, will have temperature checks and will limit the number of customers inside the store at once. Apple shares lost 0.7% Monday.
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