Stock Market Today: Dow Rises on Columbus Day as Alibaba and Oil Surge - Barron's

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Monday is expected to be quiet on Wall Street amid the Columbus Day holiday.

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The stock market was higher on Monday, as a jump in commodity prices moderated and Merck submitted its Covid-19 pill to the Food and Drug Administration for emergency approval.

By midday, the Dow Jones Industrial Average was up 193 points, or 0.6%, after the index slipped 8 points Friday to close at 34,746. The S&P 500 and Nasdaq Composite were both up 0.5%. All three indexes had been down in the morning, as higher oil prices and bond yields weighed on stocks.

“Commodity prices came off their highs and that, combined with Merck formally applying for Emergency Use Authorization for the Covid pill,” helped the stock market stage a turnaround, said Tom Essaye, founder of Sevens Report Research.

Brent crude oil, the international benchmark, rose 1.8% to over $83 a barrel, with WTI crude oil up 2.1% to over $81 a barrel. Oil had been up as much as 3% earlier in the day. Natural gas prices initially popped, before falling more than 2%.

Higher oil and gas prices could be costly for some companies, but could also reduce consumer demand. Meanwhile, they could prompt the Federal Reserve to hike interest rates earlier than anticipated in order to stop inflation.

Plus, Merck (ticker: MRK) formally submitted a request to the FDA for emergency use authorization of its Covid-19 pill, which reduces hospitalization risk. This means the pill could be approved in just weeks. Merck shares rose in premarket trading before positing a flat move during regular hours.

Also, global bond yields were rising on Monday. The U.K. 10-year Gilt’s yield rose to 1.19% from 1.16% Friday, though the yield fell from its intraday high. The German 10-year Bund saw its yield pop to negative 0.12% from negative 0.148%, also down from its intraday high. While the U.S. bond market is closed for Columbus day, these jumps in yields could signify U.S. Treasury yields are bound to pop this week.

Yields have been spiking since September, and stocks remain below their all-time highs. The S&P 500 is still down more than 2.5% from its record high, hit on Sept. 2, as higher bond yields make future profits less valuable. Since reaching its high of 4,536, the S&P 500 has dropped as low as 4,300. 

The dollar rose, with the U.S. Dollar Index (DXY) up 0.1% to just above 94. That can bring oil prices lower, as oil—denominated in dollars—becomes more costly when the greenback rises. But Essaye explained that, unless the dollar surges from here, global oil buyers still need to purchase the substance, and they may see their profit margins get squeezed as a result.

Investors will closely watch the wave of coming corporate earnings for the impact of rising energy prices and supply-chain complications, but the first major groups to release results are the big banks. 

Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), Morgan Stanley (MS), and Goldman Sachs (GS) all report this week, and analysts noted that their outlooks for 2022 are likely to be more influential for stocks than the economic data releases on the calendar.

Overseas, Tokyo’s Nikkei 225 rose 1.6% as investor sentiment was buoyed by comments from the new prime minister, Fumio Kishida, that he isn’t considering changes to Japanese capital-gains tax. The pan-European Stoxx 600 was essentially flat.

Here are 10 stocks on the move Monday:

Oil stocks surged as the price of oil did the same.  Occidental Petroleum (OXY) and  Marathon Oil (MRO) both saw shares rise more than 2%.

Zoom Video Communications (ZM) stock rose 1.1% even after getting a price target cut to $300 from $350 at Stifel. 

Comcast (CMCSA) stock dropped 2.3% after getting downgraded to Market Perform from Outperform at Raymond James. 

Emerson Electric (EMR) stock fell 1.9% as the company plans to merge its software business with Aspen Technology (AZPN) in an $11 billion cash and stock deal. 

Alibaba (9988.H.K.) stock rose 7.9% in Hong Kong, with Alibaba ‘s (BABA) U.S.-listed shares up 3.1%. It rallied along with other Chinese tech stocks in Hong Kong, as Tencent (0700.H.K.) lifted 3%, Meituan (3690.H.K.) surged 8.4%, Baidu (BIDU) rose 6.4%, and JD.com (JD) increased 5.4%.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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Stock Market Today: Dow Rises on Columbus Day as Alibaba and Oil Surge - Barron's
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