Nasdaq turns positive in final hour of trading, S&P 500 rebounds after touching new 2022 low

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U.S. stocks swung between gains and losses in volatile trading Monday, with S&P 500 hit a new low for year before a late afternoon bounce.

The Nasdaq Composite rose 0.8%, while the S&P 500 and Dow Jones Industrial Average were flat.

The Dow and S&P 500 are coming off their worst month since March 2020, when the pandemic took hold. The Dow finished April 4.9% lower, while the S&P tanked 8.8%. The Nasdaq closed down 13.26% for its worst month since 2008.

The market breaking through its previous lows of the year is one reason strategists believe stocks have further to fall.

“Sentiment is negative, but we still didn’t see a flush. We almost needed to see at least a break of these lows to see some more more fear in the market, more stop levels triggered,” said Keith Lerner, co-CIO at Truist Advisory Services.

“In some ways, as much as most technicians want to see support held, in my view you almost need to see that [break] to get a more durable bottom.”

Tech was a particular weak point in April, and some of the biggest names were struggling again on Monday. Shares of Amazon fell 2%, while Apple also slipped into the red. Art Cashin of UBS said on CNBC’s “Squawk on the Street” that the trading of Apple and Amazon in particular could be a barometer of the next steps for the broader market.

However, Netflix and Facebook-parent Meta Platforms each jumped more than 3%. Microsoft and Google-parent Alphabet advanced about 1% each.

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Volatility in the bond market likely contributed to the swings in stocks on Monday. The 10-year Treasury yield rose as high as 2.99%, its highest level since 2018.

“3% is certainly important. … It’s a psychological barrier that’s got people worried about what the Fed is going to do,” said Matt Maley of Miller Tabak

Investors are looking ahead to Wednesday, when the Federal Open Market Committee will issue a statement on monetary policy. The decision will be released at 2 p.m. ET, with Federal Reserve Chairman Jerome Powell holding a press conference at 2:30 p.m.

“With inflation so high and earnings growth slowing rapidly, stocks no longer provide the inflation hedge many investors are counting on. Real earnings yield tends to lead real stock returns on a y/y basis by about 6 months. It suggests we have meaningful downside at the index level as investors figure this out,” Morgan Stanley equity strategist Michael Wilson said in a note to clients.

Another key economic indicator will come Friday when April’s jobs report is released.

Earnings season is now more than halfway finished, but a number of companies are set to post results in the coming week, including a host of consumer-focused restaurant and travel companies.

Expedia, MGM Resorts, Pfizer, Airbnb, Starbucks, Lyft, Marriott, Yum Brands, Uber, eBay and TripAdvisor are just some of the names on deck.

Of the more than 280 S&P 500 companies that have reported earnings so far, 80% have beat earnings estimates with 73% topping revenue expectations, according to data from FactSet.

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