Stocks traded mixed on Monday, with the Dow pulling lower as Boeing (BA) shares sold off and uncertainty about the prospects for interest-rate cuts continued to weigh on markets.
The Dow Jones Industrial Average (^DJI) sank around 0.4%, or 170 points. The S&P 500 (^GSPC) rose 0.2%, and the tech-heavy Nasdaq (^IXIC) was up 0.5%, after all three major stock indexes broke a nine-week winning steak on Friday.
Dow component Boeing’s shares tumbled as much as 9% after US authorities grounded some 737 Max 9 jets in the wake of a midair fuselage blowout. The incident hit other stocks, with shares in Max 9 operators Alaska Airlines (ALK) and United Airlines (UAL), which operate the jet, losing ground. Fuselage maker Spirit AeroSystems’s (SPR) shares sank more than 10%.
Overall, investors are treading carefully after stocks took a bruising in the first days of 2024 thanks to dwindling expectations for an early rate cut from the Federal Reserve. Strong labor market data, including a hotter-than-expected December jobs report, have intensified the debate around the path of Fed policy.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
This week could bring a catalyst for the market, with earnings reports from big banks and a crucial reading on inflation ahead. The CPI inflation reading is due Thursday, while JPMorgan (JPM), Wells Fargo (WFC), and Bank of America (BAC) will kick off the fourth-quarter earnings season.
One risk is potentially off the table after congressional leaders said Sunday they have reached a $1.59 trillion spending deal aimed at averting a looming government shutdown. The benchmark 10-year Treasury yield (^TNX) hung on above 4% after last week’s gains.
Meanwhile, oil prices were fell more than 4% as investors absorbed Saudi Arabia’s decision to cut key prices of crude supplies to all regions, including its main Asia market.
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Boeing plunges after 737 MAX grounding
Boeing (BA) stock fell as much as 8% early Monday after an incident onboard an Alaska Airlines (ALK) flight late Friday led the FAA to ground some of the company’s 737 MAX 9 jets over the weekend.
Shares of Spirit AeroSystems (SPR), which makes the fuselage for the jet, also fell more than 13% at the open.
According to data from Yahoo Finance’s Jared Blikre, Boeing’s gap down at the market open was its worst since May 2022.
As Yahoo Finance’s Josh Schafer reported, Wall Street analysts view this news as a challenge for Boeing in the short term, but not something that changes the longer term story for the industrial giant.
JPMorgan’s Seth Seifman wrote in a client note that, “Our view remains that Boeing’s key task over the next two years is to ramp production and deliveries of 737s and 787s … Friday’s 737 MAX 9 accident is obviously not helpful in this regard but the extent of the setback is not yet clear, with a range of potential outcomes.”
Ron Epstein, an analyst at Bank of America Global Research, wrote Monday, “with the limited information we have at this early stage, this appears to be a manufacturing quality escape as opposed to a design issue.”
Epstein maintained a Buy rating on the stock and kept a $275 price target on Boeing.
In this photo released by the National Transportation Safety Board, NTSB Investigator-in-Charge John Lovell examines the fuselage plug area of Alaska Airlines Flight 1282 on Sunday, Jan. 7, 2024, in Portland, Ore. (National Transportation Safety Board via AP) (ASSOCIATED PRESS) -
Stocks open mixed after snapping 9-week winning streak
Stocks opened mixed on Monday after ending their 9-week winning streak last week.
The Dow Jones Industrial Average (^DJI) fell 0.4%, or 150 points, while the S&P 500 (^GSPC) rose 0.2%. The tech-heavy Nasdaq (^IXIC) was up 0.4%.
Last week hotter-than-expected jobs data raised investors questions on when the Federal Reserve was likely to begin cutting interest rates this year.
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