Nasdaq 100, Dow Jones, S&P 500: Benchmark Index Lifted by Energy Stocks Following OPEC+ Cuts

Highlights

• S&P 500 energy sector index surges 4.9% on OPEC+ oil output cuts
• Tesla drops 6.1% on disappointing Q1 deliveries despite price cuts
• Dow lifted by UnitedHealth Group’s 4.6% rally on better Medicare Advantage rates

Overview

Energy stocks lifted the S&P 500 index on Monday, following the surprise announcement of OPEC+ group’s oil output cuts, which pushed oil prices towards $100 a barrel.

Tesla’s disappointing electric vehicle deliveries for the first quarter led to a 6.1% drop in the stock.

Despite fears of inflation and recession, analysts do not expect the market to price in another recession. And if there is volatility, it will likely be a “normal” correction of 5% to 15%.

OPEC+ Announces Unexpected Output Cuts, Energy Stocks Surge on Wall Street

Energy stocks surged as OPEC+ announced 1.16M bpd output cut on Monday. As a result, the S&P 500 energy sector index rose by 4.9%, and Chevron Corp, Exxon Mobil Corp, and Occidental Petroleum Corp all rallied by more than 4%. The Energy Select Sector SPDR fund (XLE), which tracks the S&P 500 energy sector, popped more than 4%.

The surge in oil prices has some investors worried that higher oil costs would add to inflation worries on Wall Street. Days after cooling prices, some feared higher oil costs could halt US monetary tightening.

Tesla’s Shares Dip 6.1% Despite Price Cuts, UnitedHealth Group Inc’s Rally Boosts Dow

Tesla’s stock dropped by 6.1% after the electric vehicle company disclosed that its deliveries rose just 4% from the previous quarter, even after CEO Elon Musk slashed car prices in January to boost demand.

However, other stocks rallied on Monday. For example, the Dow was lifted in part by a 4.6% rally in UnitedHealth Group Inc on better-than-proposed Medicare Advantage rates for 2024.

Manufacturing Weakness and Inflation Concerns Ahead of Q1 Earnings Season

The Institute for Supply Management and S&P Global surveys showed weakness in manufacturing activity in March, which drew comfort from investors worried about inflation.

Interest rate futures imply that there is a 56% chance that the Fed will raise rates by 25 basis points at its meeting in May. And a 44% chance that it will keep interest rates unchanged, according to CME Group’s Fedwatch tool.

The first quarter earnings season is around the corner. Big banks will be among the first to report in coming weeks. They could offer details about the sector’s overall health after the March collapse of Silicon Valley Bank sparked fears of a broader industry crisis.

Conclusion

The market remains volatile, with many factors influencing its movements. Energy stocks lifted the S&P 500 index on Monday, following the surprise announcement of OPEC+ group’s oil output cuts, which pushed oil prices towards $100 a barrel.

Tesla’s disappointing electric vehicle deliveries for the first quarter led to a 6.1% drop in the stock. Despite fears of inflation and recession, analysts do not expect the market to price in another recession. If there is volatility, it will likely be a “normal” correction of 5% to 15%.

Investors should keep an eye on the latest number from the monthly Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. Additionally, the first-quarter earnings season that is around the corner.