Wall Street closed slightly higher on Monday, led by tech and consumer discretionaries. The market corrected itself from the broad sell-off that marked the last week. However, apprehensions about the further tightening of monetary policy by the Fed continue to prevail. All three major indexes ended in the green.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.2% or 72.17 points to close at 32,889.09. Seventeen components of the 30-stock index ended in positive territory, 12 ended in negative, while one remained unchanged.

The S&P 500 advanced 0.3% or 12.2 points to close at 3,982.24. Seven of the 11 broad sectors of the benchmark index ended in positive territory. The Consumer Discretionary Select Sector SPDR (XLY), the Industrials Select Sector SPDR (XLI) and the Technology Select Sector SPDR (XLK) gained 1.2%, 0.9% and 0.5%, respectively, while the Utilities Select Sector SPDR (XLU) declined 0.7%.

The tech-heavy Nasdaq gained 0.6% or 72.04 points to finish at 11,466.98.

The fear-gauge CBOE Volatility Index (VIX) was down 3.3% to 20.95. A total of 9.9 billion shares were traded on Monday, lower than the last 20-session average of 10.7 billion. Advancers outnumbered decliners on the NYSE by a 1.69-to-1 ratio. On Nasdaq, a 1.41-to-1 ratio favored advancing issues.

Market Corrects Itself From Last Week’s Sell-Off

With treasury yields easing on Monday, the market corrected itself from last week, the worst week year to date. However, with prevailing concerns about higher interest rate regimes in the months ahead, all three indexes ended the day well off their session highs.

A recent slew of economic data has portrayed a picture of a resilient, robust labor market. Other inflation indicators have also raised concerns that the Fed might revert to its policy of rapid rate hikes. The latest reports showing consumer spending at almost a three-year high have only added fuel to the fears. Investors continue to worry that this might lead the Fed to infer that people have more money at their disposal to spend and hence, would look for further tightening of policy.

However, even when markets are on a downward spiral, relief sessions often mark the order of business, and Monday was no exception. All eyes are currently focused on the Fed March meeting, where a 50 bps interest rate hike is now expected.

Consequently, shares of Booking Holdings Inc. (BKNG Quick QuoteBKNG - Free Report) and Baidu, Inc. (BIDU Quick QuoteBIDU - Free Report) rose 2.8% and 5.2%, respectively. Both carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Fed Governor Jefferson Remains Cautiously Hopeful

Fed Governor Philip Jefferson said on Monday he was under "no illusion" that inflation would return quickly to the Fed's target rate of 2% on the basis that the PCE price index remained elevated. However, "There's a lot of resolve on the part of the (Federal Open Market) Committee,”, Jefferson added, “I know that I am committed to doing what it takes."

In his speech, he mentioned that core goods inflation has started to come down, and housing services inflation is likely to come down in the coming months. However, inflation for a broad array of services in the United States remains stubbornly high. His comments came in as a soft assurance for the market.

Economic Data

The U.S. Census Bureau reported that new orders for manufactured durable goods in January, down two of the last three months, decreased $13.0 billion or 4.5% to $272.3 billion. This follows a 5.1% December increase.

National Association of Realtors reported that pending home sales increased for the second consecutive month, up 8.1% from December 2022. The December numbers were revised down to a 1.1% increase from the previously reported 2.5%.