By Yasin Ebrahim
Investing.com – The Dow closed higher Monday as signs of a faster reopening of the economy pushed cyclicals corners of the market including energy and materials higher.
The ended up 0.70%, or 239 points, the was up 0.27%, and the was down 0.44%.
Energy led the broader market higher, underpinned by as investors renewed bets on a recovery in global demand despite Covid-19 cases in India that continue to mount.
“Support from the economy’s reopening is being reinforced by aggressive fiscal and monetary stimulus, the release of pent-up demand, and the drawdown of sizable household savings,” Wells Fargo (NYSE:) said in a note.
Halliburton (NYSE:), HollyFrontier (NYSE:) and Baker Hughes (NYSE:) were among the best performing energy stocks on the day, with the latter up 8%. Baker Hughes rallied after Barclays (LON:) upgraded the stock overweight from equal weight and lifted its price target to $28 from $25, citing optimism on oilfield services and equipment stocks.
In a sign of progress on the reopening, New York and New Jersey are set to begin lifting all restrictions from May 19, New York Gov. Andrew Cuomo announced Monday.
In tech, meanwhile, Apple Inc (NASDAQ:) is in the spotlight as the tech giant entered a court battle in the Northern District of California with game developer Epic Games over alleged anti-competitive practices in its App Store. Apple removed Epic Games’ Fortnite from its App Store after the latter attempted to circumvent Apple’s 30% fee.
Some on Wall Street believe that Apple will ultimately win the legal battle against Epic.
“This week Epic Games, the maker of Fortnite, will officially begin its much anticipated court battle royale with Apple in Northern District of California that we ultimately believe Cupertino will win while defending its golden jewel App Store ecosystem,” Wedbush said in a note.
Other megacap tech stocks traded lower. Google-parent Alphabet (NASDAQ:), Microsoft (NASDAQ:), Facebook (NASDAQ:) and Amazon.com (NASDAQ:) fell.
Sentiment on stocks was also lifted by ongoing signs the economic recovery is gathering momentum even as the manufacturing activity for April fell short of investor expectations.
“[D]espite coming in below expectations, the reading suggests that activity in the sector is still expanding at a solid pace,” Jefferies (NYSE:) said.
On the economic front, weaker-than-expected manufacturing activity was largely shrugged off as the underlying data “suggests that activity in the sector is still expanding at a solid pace,” Jefferies said.
Still, despite the strong day of gains, there are some on Wall Street who caution that stocks could be set for a short-term correction.
“[W]e would note that for the most part, equities remain overbought / extended on a short-term basis […] this to us implies we are still vulnerable to a correction ahead,” Janney Montgomery Scott said. “The S&P 500 could correction by 10-to-15%, though will main its long-term uptrend,” it added.