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U.S. stocks kick off May with rally, as NASDAQ halts 7-day losing skid

Published 05/02/2016, 04:21 PM
Updated 05/02/2016, 04:34 PM
The Dow, NASDAQ and S&P 500 all gained more than 0.5% on Monday

Investing.com -- U.S. stocks rose sharply on Monday, rallying from last week's mild sell-off that capped a flat month of April, as the major indices continue to show signs of decoupling with volatile oil prices.

The Dow Jones Industrial Average gained 117.52 or 0.66% to 17,891.16, while the NASDAQ Composite index added 42.23 or 0.88% to 4,817.59, halting a seven-day losing streak. The S&P 500 Composite index, meanwhile, rose 16.13 or 0.78% to 2,081.43, as nine of 10 sectors closed in the green.

Crude futures plunged nearly 3% on Monday, retreating from yearly highs, as investors digested a monthly report from Reuters, which showed that OPEC production in April increased considerably on the month to eclipse 32.6 million barrels per day. With the significant increases, output from the world's largest oil cartel is roughly 0.1 million bpd from touching all-time record highs of 32.65 million bpd in January, following Indonesia's long-awaited return to the organization.

Any major increases in production are viewed as bearish for oil, which remains awash in supply, following OPEC's decision to maintain its production ceiling above 30 million bpd 18 months ago. In the middle of the first quarter, oil traded in virtual lockstep with U.S. equities. At the time, U.S. crude prices tumbled to 13-year lows near $26 a barrel while the S&P 500 fell to October, 2014 lows. Over the last 11 weeks, oil prices have rebounded by roughly 50% while the rally in equities has been much less pronounced.

On the S&P 500, every sector besides energy closed higher on a bullish start to the month. Stocks in the Financials and Consumer Services sectors led, each gaining more than 1%. The CBOE Vix Volatility index fell by more than 6%, as Technology and Health Care exchange-traded funds (ETFs) recovered some of last week's losses. Last week, the Vix surged by more than 10%, amid weak earnings by prominent companies such as Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL) and Gilead Sciences Inc (NASDAQ:GILD). The major indices have closed the month of May higher in each of the last three years.

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The top performer on the Dow was Microsoft (NASDAQ:MSFT), which added 0.79 or 1.58% to 50.66, amid heavy profit taking. Last week, shares in Microsoft slumped to near 3-month lows after missing earnings expectations for the first quarter, due in part to subdued revenues from its Cloud-based segment. Microsoft shares, though, rallied on Monday after a bullish call from analysts at Merrill Lynch, which forecasted a bounce of approximately 30% in the coming months. The worst performer was Boeing Company (NYSE:BA), which lost 0.60 or 0.45% to 134.20. Boeing (NYSE:BA) shares fell slightly last week after Delta Air Lines Inc (NYSE:DAL) placed an order for Bombardier's (TO:BBDb) CSeries, amplifying concerns that a wave of new orders from the Canadian aerospace company could deplete the market share of the world's top aircraft manufacturer.

The top performer on the NASDAQ was Amazon.com Inc (NASDAQ:AMZN), which surged 24.25 or 3.68% to 683.84. Shares in Amazon (NASDAQ:AMZN) continued to pop, days after the Seattle-based E-commerce giant reported its fourth consecutive period of quarterly gains. The worst performer was Chinese search engine Baidu Inc (NASDAQ:BIDU), which fell 14.72 or 7.58% to 179.58. The top performer on the S&P 500 was Wynn Resorts Limited (NASDAQ:WYNN), which surged 6.07 or 6.87% to 94.37, after receiving stronger than expected revenues from its Macau casino last month. The worst performer was Seagate Technology (NASDAQ:STX), which fell 1.30 or 5.95% to 20.48. Last week, the Napa Valley based data storage company blamed a host of near-term demand factors for falling short of analysts' expectations. Shares in Seagate Technology are down more than 20% since last Thursday.

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Shares in Halliburton Company (NYSE:HAL) gained 1.80% to 42.08 after the oilfield service provider announced it is dropping its proposed $28 billion merger proposal with Baker Hughes Incorporated (NYSE:BHI) in the face of heavy antitrust opposition from federal regulators. Baker Hughes shares lost 0.96 or 1.99% to 47.40.

On the New York Stock Exchange, advancing issues outnumbered declining ones by a 1,935-1,133 margin.

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