Rally Loses Steam as Tech Hits Roadblocks, but Boeing Climbs as CEO Plans Departure

Tech stocks came under pressure from regulatory and market share concerns abroad this morning even as Boeing jumped on news its CEO plans to step down. New Home Sales are on tap later this morning, while eyes also turn to Fed speakers and Treasury auctions.

5 min read
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Key Takeaways

  • Tech under pressure on EU regulatory concerns, China favoring homegrown chips

  • Boeing shares climb on news of CEO planning departure at end of year

  • New home sales on deck, but key data this week is Friday’s PCE prices


(Monday market open) Wall Street opens this holiday-shortened week with tech under pressure and Boeing (BA) in the spotlight as its CEO plans to step down following a slew of quality issues.

Though the long rally has major indexes on pace for their fifth straight positive month and increasingly features broader sector participation, any potential weakness from so-called “mega caps” remains a threat. They began Monday lower on news of fresh regulatory and competitive challenges in both the European Union and China.

Back home, Boeing shares got an initial lift from news that CEO Dave Calhoun will leave by the end of this year. Calhoun took the reins four years ago to right the ship after the embattled company’s quality problems began the year before. Calhoun’s announcement today accompanied word that Boeing’s Board Chair Larry Kellner won’t stand for re-election.

This morning’s tech slide came after the European Union said Monday it started a probe on Apple (AAPL), Alphabet (GOOGL), and Meta (META) under its new Digital Markets Act. The EU’s press release said it’s assessing whether the three firms do enough to allow users choices beyond the companies’ own platforms in features like app stores and shopping. This comes after last week’s announcement that the U.S. Justice Department was suing Apple for anti-competitive behavior related to its smartphones.  

Chip shares separately fell on bad news from China (see more below).

This Friday, when markets will be closed, the Bureau of Economic Analysis reports its Personal Consumption Expenditures Price Index (PCE) for March. The PCE, the Fed’s favored inflation gauge, will be closely studied after both the Consumer Price Index and the Producer Price Index (PPI) stoked inflation concerns earlier this month. Recent PCE reports appeared to paint a somewhat tamer picture of inflation than the CPI and PPI figures.

In January, overall PCE rose 0.3% from December, while core PCE, which removes food and energy, increased 0.4%. Both matched analysts’ expectations. Compared to year-earlier levels, core PCE eased to 2.8%, down from 2.9% in December and the lowest annual rise since March 2021. “We are still a couple weeks away from the start of first-quarter earnings season and there aren’t a ton of potential catalysts to focus on this week,” said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.

Futures based on the S&P 500® index (SPX) were down 0.3% shortly before the close of overnight trading and futures based on the Nasdaq-100® (NDX) were down 0.5%. Futures based on the Dow Jones Industrial Average® ($DJI) fell 0.15%. A slight gain in Treasury yields appears to be another weight on stocks this morning.

Morning rush

  • The 10-year U.S. Treasury yield (TNX) rose a fraction to 4.22%.
  • The U.S. Dollar Index ($DXY) swung higher to 104.4.
  • The CBOE Volatility Index® (VIX) jumped to 13.54.
  • WTI Crude Oil (/CL) was steady at $80.80 per barrel.
  • Bitcoin (/BTC) rose 2% to just over $67,000.

Wall Street enters the final week of Q1 emboldened by the outlook for the economy and confident the Federal Reserve will pivot to a rate-reduction phase later this year. This week, which will be shortened by the Good Friday holiday, begins with futures trading building in roughly 73% probability of a 25-basis point June rate cut.

Last week’s Federal Open Market Committee (FOMC) meeting helped fuel beliefs that the Fed is getting closer to its first rate cuts in four years. The FOMC kept its benchmark funds rate unchanged, as expected, while also maintaining its dot-plot projection that suggested it will make three quarter-point cuts by the end of this year.

“Although there is no guarantee the Fed will give the markets three rate cuts this year, investors cheered the fact that they maintained the forecast, despite the recent hotter-than-expected inflation reports,” said Schwab’s Peterson said.

In the wake of the Fed’s new dot plot, however, Atlanta Fed President Raphael Bostic said he expects just one quarter-point rate cut this year, Reuters reported. Fed Chairman Jerome Powell is scheduled to speak Friday when the markets are closed. And several Treasury market auctions are on tap before then.

The dot plot showed many policy makers still expecting just two rate cuts this year, and Bostic’s comments highlight a potential risk to markets this week as individual Fed speakers come out with their own views.

What to watch

There’s a dearth of data today. The earnings calendar is empty and the only major U.S. report on tap is February New Home Sales due at 10 a.m. ET. A host of housing data last week, including Existing Home Sales, housing starts, and building permits, all came in stronger than analysts had expected, reinforcing impressions that the economy remains strong despite expectations of slowing economic growth this quarter from Q4.

The Atlanta Fed’s GDPNow gauge has been steadily revised lower to 2% from over 3% just last week, representing slowdown from the 3% pace in Q4.

Analysts expect today’s New Home Sales report to show the annual pace at 680,000, up from 661,000 in January, according to Briefing.com. Other numbers to watch in the report include the median sales price, which declined 2.6% to $420,700 in January, the fifth-straight month of declines.

Beyond that, several economic readings this week could influence interest rate expectations and market direction.

On Tuesday, the U.S. Census Bureau reports durable goods orders for February and the Conference Board releases its Consumer Confidence Index® update for March.

Thursday brings the government’s final estimate for fourth-quarter gross domestic product (GDP) and the University of Michigan’s final Index of Consumer Sentiment for March.

And of course, the key data point this week is Friday’s PCE report.

Stocks in spotlight

Investors will be watching semiconductors to see if the sector’s sharp rebound last week carries forward. The PHLX Semiconductor Index (SOX) gained 3.2% last week, partly reclaiming a drop of over 10% from a record intraday high posted March 8. Nvidia (NVDA) helped lead the way up with a gain of 7.3% last week, and the shares closed Friday at a record just under $943.

With four days left in the first quarter, semiconductors are on track to be the strongest-performing sector so far this year. The SOX gained 17.6% for the year through last Friday. The S&P 500 Communication Services Index ($SP500#50), which includes Alphabet, Meta Platforms, and Netflix (NFLX) is not far behind with a 16.4% advance.

However, two major semiconductor firms struggled this morning ahead of the open. Intel (INTC) and Advanced Micro Devices (AMD) both fell 3% after the Financial Times reported that China has introduced new guidelines that will mean U.S. microprocessors from the two firms are phased out of government PCs and servers, as Beijing ramps up a campaign to replace foreign technology with homegrown solutions. This might spread to Microsoft (MSFT), as well, with Microsoft Word under a potential microscope.

Banks have been among the weakest performers as the industry continued to shake the hangover from last year’s regional banking crisis. The KBW Regional Banking Index (KRX) was down 10.2% this year through last Friday.

On a brighter note, last week saw breadth improve across the market, meaning more sectors participating in the rally. This is typically a healthy sign. Investors continue rotating into value stocks and other sectors beyond technology. Materials, energy, financials, industrials, and utilities all feature 80% or more of their member shares trading at or above their 50-day moving averages.

Earnings season is mostly finished, though a few major companies report quarterly results this week.

Cruise operator Carnival (CCL) is expected to report quarterly earnings Wednesday. Pharmacy chain Walgreens Boots Alliance (WBA), which was recently removed from the Dow, is expected to report results Thursday.

Stocks on the move:

  • Disney (DIS) shares rose 1.2% in premarket trading after the company received an upgrade from Barclays. Better-than-expected free cash flow and earnings guidance for fiscal 2024 have helped investors gain more confidence about Disney’s earnings estimates having bottomed, the analyst said.
  • Tesla (TSLA) fell 1.2% on a downgrade from Mizuho. The firm said near-term electric vehicle demand and tightening liquidity are creating challenges into 2025, and now sees 2024 EV growth up 15% year-over-year versus up 25% previously. The analyst also downgraded Rivian (RIVN) and Nio (NIO), citing slowing demand and increasing inventory.
  • Boeing rose 2% in premarket trading on the company’s leadership news.

Friday in review:

Equity indexes finished narrowly mixed Friday, though the Nasdaq Composite® ($COMP) rose 0.2% to its third record close in a row and gained 2.9% for the week. The S&P 500 index and the Dow Jones Industrial Average advanced 2.3% and 2.0%, respectively, for the week.

The small-cap Russell 2000® Index (RUT) added 1.6% for the week, its third weekly gain in the past four.

The S&P 500 index gained 9.7% in 2024 through last week, and its 20 record closes so far this year rank as the sixth most for a first quarter since World War II, according to Sam Stovall, chief investment strategist at CFRA. In both 2013 and 1998, the index posted 25 record closes in the first quarter

Eye on the Fed

Early today, futures traders assessed 89% odds the FOMC will keep rates unchanged following its April 30 to May 1 meeting, based on the CME FedWatch Tool. Chances of a quarter-point rate cut following the FOMC meeting in June are seen at 73%, based on the FedWatch tool.

CHART OF THE DAY: HIGHER GEAR The industrial sector appears to be moving into overdrive as the Industrial Select Sector Index ($IXI) creates some distance on the S&P 500 index (SPX-pink). The industrial sector started showing strength at the beginning of 2024, and gained on the SPX through the first quarter. Over the last few days, industrials appear to have put the hammer down. Data source: S&P Dow Jones Indices. Chart source: thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results. 

Thinking cap

Ideas to mull as you trade or invest

S&P 500’s heady clip seen slowing: The U.S. stock market’s record pace during the first quarter may shift down a gear or two over the next year, based on a FactSet assessment of analysts’ forecasts. Over the next 12 months, industry analysts predicted the S&P 500 index will climb 7% from last Wednesday’s record close of 5,224.62, according to FactSet’s study, which was based on median price targets (a 7% gain would push the benchmark near 5,590). Analysts expect health care and real estate to be the strongest sectors over the next 12 months, with 10% increases estimated for both, while industrials and materials are expected to be the weakest. The S&P 500 has already risen nearly 10% in the first quarter, so FactSet’s study suggests analysts foresee further market strength, but not at the same level seen during  the first few months of 2024.

Global shipping shakes off COVID snags: The supply chain snarls that plagued global shipping during the COVID-19 pandemic appeared to be gone, but the industry is still grappling with other challenges. North American cargo shipping volume returned to pre-pandemic levels in 2023, according to a report from CBRE, a commercial real estate consultant. Cargo container volume during the fourth quarter at 14 major ports totaled 14.37 million 20-foot equivalent units (TEU), up 1.6% from the same period in 2022, CBRE said. The Port of Los Angeles topped the list at 2.23 million TEUs during the quarter, up 9% year over year. But not far outside North America, problems persist. Severe drought hampered the Panama Canal, cutting traffic to 24 ships per day from 38. “This has delayed deliveries and increased shipping costs,” CBRE said. “The use of longer sea routes or land-based transportation could impact industrial space demand, especially in East and Gulf Coast markets.”


March 26: Durable Goods orders, S&P CoreLogic Case-Shiller Home Price Index.

March 27: EIA Weekly Petroleum Status Report.

March 28: Weekly initial jobless claims, third estimate for fourth quarter GDP, University of Michigan Index of Consumer Sentiment final March estimate.

March 29: U.S. markets closed for Good Friday.

April 1: Construction Spending, Institute for Supply Management Manufacturing PMI®.


Key Takeaways

  • Tech under pressure on EU regulatory concerns, China favoring homegrown chips

  • Boeing shares climb on news of CEO planning departure at end of year

  • New home sales on deck, but key data this week is Friday’s PCE prices


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