Sharp Rise in Apple Rescues U.S. Equities after Early Pressure from Boeing’s Plunge

The major U.S. equity indexes finished higher on Monday after shrugging off early session weakness. All three indexes experienced an early setback related to Friday’s mixed U.S. Non-Farm Payrolls report and weaker-than-expected trade balance data from China.

The Dow Jones Industrial Average was hit particularly hard in reaction to steep plunge in Dow component Boeing. The airline maker fell 5.3 percent after a plane crash on Sunday that involved the 737 MAX 8 jet. This was the second crash in less than six months involving that model. Boeing’s losses trimmed more than 150 points from the Dow.

In the cash market on Monday, the benchmark S&P 500 Index settled at 2783.30, up 40.23 or +1.45%. The blue chip Dow Jones Industrial Average finished at 25650.88, up 200.64 or +0.78% and the tech-based NASDAQ Composite closed at 7558.06, up 149.92 or +2.01%.

Tech Stocks Led by Apple Rescue Dow

After consolidating near the opening, the Dow Jones Industrial Average rebounded on the back of a 3.47 percent gain in Apple shares. The rally in the communications giant and Dow component helped offset some of Boeing’s losses. The catalyst behind the rally was Bank of America Merrill Lynch’s upgrade of the stock to buy from neutral. Analysts at Bank of America said in a note that the company’s recent pullback presents “opportunity.”  BoA also raised its 12-month price target to $210 per share from $180.

The NASDAQ Composite Index was bolstered by shares of Facebook, which gained 1.46 percent after Nomura Instinet upgraded it to buy from neutral. In a note to clients, analyst Mark Kelley said consumers are transitioning to Facebook’s Stories format and its increased focus on messaging. Kelley also hiked his price target to $215 per share from $172.

Further boosting technology shares was the news that Nvidia was buying Mellanox Technologies for $6.8 billion. Both stocks soared on the news, lifting the NASDAQ Composite, with Nvidia rising more than 6.97 percent while Mellanox jumped 7.78 percent.

U.S. Retail Sales Offer Mixed Picture of Economy

Monday’s U.S. Retail Sales report offered mixed results. January’s headline number unexpectedly rose, helped by an increase in purchases of building materials and discretionary spending, but sales in December were much weaker than previously reported.

Despite the mixed results, the report still showed the economy was on strong footing after a series of weaker-than-expected reports from December as well as the steep plunge in the number of people hired in February.

According to the Commerce Department, Retail Sales rose 0.2 percent. Data for December was revised down to show retail sales dropping 1.6 percent instead of tumbling 1.2 percent as previously reported. Economists had forecast retail sales to be unchanged in January.

Further details revealed the drop in December was the biggest since September 2009 when the economy was emerging from recession. Additionally, sales in January increased 2.3 percent from a year ago.

Furthermore, while some investors feel the downward revision to December core retail sales could have an impact on the government’s fourth-quarter gross domestic product estimate, others are saying the data may have been skewed by a 35-day partial shutdown of the federal government that ended on January 25.

Traders should also note that we’re looking at a quick turnaround before the next report. February’s retail sales report, which was scheduled for publication on Thursday, will be released on April 1.