The S&P 500 and Canada’s TSX ended just slightly in the red on Monday, with the banking sector under pressure amid warnings of potential losses from a hedge fund’s default on margin calls, while optimism over the U.S. economy limited the day’s declines.
The S&P/TSX Composite Index fell 33.36 points, or 0.18%, to 18,719.22. The energy and real estate sectors both lost about 1%, while Canadian financials edged down 0.18% - a more modest decline than in U.S. bank stocks. Consumer staples was a bright spot, gaining 1.86%.
The energy sector ended off its lows of the day, thanks to oil prices edging higher after Reuters reported that Russia would support stable oil output from OPEC+ ahead of a meeting with the producer group later this week.
Oil futures had fallen earlier in the session on news that a container ship in the Suez Canal blocking traffic for nearly a week had been refloated.
Brent oil rose 26 cents to $64.83 a barrel by 1:08 p.m. ET. U.S. crude rose 47 cents to $61.44 a barrel.
Russia will support broadly stable oil output by the Organization of the Petroleum Exporting Countries and allies including Russia (OPEC+) in May, while seeking a relatively small output hike for itself to meet the rising seasonal demand, Reuters cited a source familiar with Russia’s thinking as saying.
The Dow ended higher, with shares of planemaker Boeing Co rising 2.3% after the company reached a deal with U.S. budget carrier Southwest Airlines Co for a version of the 737 MAX aircraft.
Nomura and Credit Suisse are facing billions of dollars in losses after a U.S. hedge fund, named by sources as Archegos Capital, defaulted on margin calls, putting investors on edge about who else might have been caught out.
Shares of big U.S. banks and even regional banks fell on the news. The KBW Nasdaq Bank stock index ended 2.3% lower after falling nearly 3.5% during the session.
“There’s still chatter as to whether or not, and which, American banks may be affected. That is a question that’s lurking. But so far the market has taken (the news) in stride essentially,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.
Indexes ended off their lowest levels of the day. Optimism about speedy U.S. vaccinations and record stimulus, which drove the Dow and the S&P 500 to record closing highs last week, helped keep a floor in the market along with upbeat estimates for upcoming earnings, she said.
The Dow Jones Industrial Average rose 98.49 points, or 0.3%, to 33,171.37, the S&P 500 lost 3.45 points, or 0.09%, to 3,971.09 and the Nasdaq Composite dropped 79.08 points, or 0.6%, to 13,059.65.
Discovery Inc, ViacomCBS, U.S.-listed shares of Baidu and VIPShop, all linked to Archegos, fell, extending recent losses.
The Nasdaq was on track to post its first monthly decline in five months.
Investors may also be adjusting their holdings for quarter-end “window dressing,” Krosby said.
Longer-dated Treasury yields rose on Monday, steepening the yield curve, on investor optimism about the rollout of coronavirus vaccines in the United States and expectations that President Joe Biden’s infrastructure initiative could bolster economic growth and debt issuance.
Benchmark 10-year yields rose to a session high of 1.728% after the state of New York on Monday afternoon announced that people aged 30 and older would be eligible for coronavirus vaccinations from March 30.
Volume on U.S. exchanges was 11.02 billion shares, compared with the 13.6 billion average for the full session over the last 20 trading days.
Declining issues outnumbered advancing ones on the NYSE by a 1.93-to-1 ratio; on Nasdaq, a 3.12-to-1 ratio favored decliners.
The S&P 500 posted 71 new 52-week highs and no new lows; the Nasdaq Composite recorded 88 new highs and 54 new lows.
Read more: Stocks that saw action on Monday - and why
Reuters, Globe staff
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