The stock market reversed early losses to post gains midday as a manufacturing index tumbled in July and strong earnings and acquisition news provided a boost. Boeing (BA) led blue chips.
The Nasdaq composite led the major indexes, gaining 0.5%. The S&P 500 gained 0.1% and the Dow Jones Industrial Average rose 0.2%. The small cap Russell 2000 was down 0.1%. The Innovator IBD 50 (FFTY) ETF rose 0.1%.
Volume fell on the Nasdaq and rose on the NYSE from the same time on Friday.
The tech-heavy Nasdaq climbed 12% in July, its best month since April 2020. The S&P 500 gained 9.1% in July, while the Dow Jones Industrialists rose 6.7%. This is the best monthly performance for the S&P and the Dow since November 2020.
Overview of the US stock market today
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Investors were encouraged that slowing economic growth could prompt the Fed to raise rates at a slower pace.
Weak PMI data dampens stock market
However, the recession could be worse than investors had anticipated. This morning, the seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index was 52.2 in July, down from 52.7 in June and roughly in line with Econoday’s estimate.
“With the exception of periods of pandemic containment, July saw U.S. manufacturers report the toughest trading conditions since 2009,” said Chris Williamson, chief economist at S&P Global Market Intelligence. “A spring growth spurt quickly reversed, with new orders for factory goods falling for a second straight month in July, leading to the first decline in output in two years and a sharp reduction in growth in employment.”
The ISM manufacturing index for July came in at 52.8, above views and slightly lower than the previous month’s reading.
Asian and European stock markets started the week mostly with gains. Hong Kong’s Hang Seng Index climbed 0.1% and the Shanghai Composite Index 0.2%. Japanese stocks also rose, with the Nikkei 225 index up 0.7%.
European stocks mostly rose in afternoon trading. London’s FTSE 100 rose 0.1%. The German DAX climbed 0.2% and the French CAC 40 index fell 0.1%.
The 10-year Treasury yield continued to fall to 2.59% on Monday morning. Meanwhile, US oil prices took a hit, down 5.5% to around $93 a barrel.
Earnings and acquisitions lead the stock market
FirstSource Builders (BLDR) climbed nearly 8% after posting strong earnings early Monday, easily beating analyst estimates for earnings and sales.
Global Payments (GPN) grew 6% on strong results and agreed to acquire EVO Payments (EVOP) for $4 billion. EVOP climbed 19% on the news.
chip maker Onsemi (ON) beat views on earnings and sales for the second quarter and guided higher for the current third quarter, but shares fell 4.8%.
Aerospace giant Dow Jones Boeing (BA) rose more than 7% after the company temporarily averted a strike at three defense manufacturing plants and lifted a regulatory hurdle to resume deliveries of its 787 Dreamliner.
Celsius Fund (CELH) rebounded 13% after PepsiCo (PEP) and Celsius announced a long-term strategic distribution agreement that includes an investment by PepsiCo in Celsius. An IBD 50, Celsius stock breaks well above the 5% buy zone after clearing an aggressive entry with volume, and is looking to form a big cup with a new buy point of 110.32.
Valvoline (VVV) fell 1.4% after announcing a definitive agreement with Aramco to sell its global products business for $2.65 billion in cash.
Follow Michael Molinski on Twitter @IMmolinski
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