Stock Market Forecast – Technology and Energy Lead US Market Higher

US stocks rallied on Monday, buoyed by technology shares despite heavy pressure which was driven by Boeing. Following a crash of an Ethiopian flight over the weekend, China grounded all of its Boeing planes. The news hammered Boeing shares which tumbled more than 10% on the open. During the course of the trading session, the large-cap plane producer rebounded, ending the session down slightly more than 5%.

All sectors were higher driven by energy and technology shares. Utilities and Financials were the worst performers in a robust tape. Apple shares rose 3.46% and helped drive nearly all the major indices higher. Apple is broadly owned by many ETFs, and a substantial rally in that company lifts all boats.

The best performing technology share was Nvidia which surged nearly 7% after announcing that it would purchase Israel’s Mellanox for $6.8 billion in a data center push. Mellanox, based in Israel and the United States, makes chips and other hardware for data center servers that power cloud computing. Data center revenue accounts for nearly a third of Nvidia’s sales.

HKEC Announcement New Mid-Cap futures Index Contracts

Hong Kong Exchanges and Clearing Limited announced an agreement with MSCI to offer futures contracts on the MSCI China A Index. Adding futures on the MSCI China A index will allow global investors in the A shares to hedge their exposure. HKEC did not issue a launch date for the new futures contract. The announcement is timely as it comes as Chinese stocks have been experienced elevated volatility.

Energy Shares Rally

Energy shares rallied led by Valero, Marathon, and Devon, as crude oil prices increased by 1.34%. This comes as OPEC announced that it will continue producing less crude oil than it could until at least June, as the next meeting in April when OPEC is scheduled to meet would be too early to increase production. Oil demand is likely to remain elevated according to a Saudi Offical led by China and the United States.

Strong January Retail Sales Was Offset by Revision

A delayed retail sales release for January showed a larger than expected increase driven by consumer spending. Retail sales increased 0.2% month over month. December figures were revised lower dropping 1.6% down 0.4% from the prior 1.2% preliminary release.  The December drop was the largest seen in 10-years.  Expectations for January retail sales were for an unchanged figure.  On a year over year basis, January retail sales increase 2.3%. The control group which excludes car, gasoline, and food, all as retail sales rebound of 1.1% in January. The December figure dropped 2.3.  The revision to the December retail sales figures will reduce the 2.6% annual GDP figures that were reported for the Q4 by the Commerce Department. Retail same-store sales have been mixed during this past earnings season. Recent big box stores have reported better than expected retail sales, which bodes well for the February retail sales figures.