U.S. stocks finished higher Monday as tech stocks bounced from correction territory to lead gains on Wall Street following Elon Musk's successful $44 billion 'take private' bid for social media group Twitter (TWTR).
The late-afternoon moves reversed sharp earlier to declines, triggered by bets on faster Federal Reserve rate hikes and China's accelerating Covid-19 crackdown, which could trigger new business and travel restrictions in the capital of Beijing.
The Dow Jones Industrial Average, which had fallen by nearly 500 points by mid-day, ended 238 points higher, while the S&P 500 gained 24 points and the tech-focused Nasdaq Composite rallied 141 points.
Twitter (TWTR) closed 5.66% higher after the microblogging website agreed to a $44 billion takeover offer from Musk that will take the company private. Tesla (TSLA) closed 0.7% lower at $998.02 each.
"Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it," the world's richest man said in a statement.
The Twitter saga overshadowed grim news from China earlier in the session, where officials ordered millions of residents in the capital of Beijing for mandatory testing over the weekend as infections spread deeply into the city of 20 million amid the country's ongoing Covid-19 resurgence.
In Shanghai, city officials tightened their lockdown rules as restrictions headed into a fourth week in China's biggest metropolitan area.
Stocks in the region were hammered as a result, with the Shanghai Composite falling 5.15%, the biggest single-day decline in more than two years, and the region-wide MSCI ex-Japan index tumbling 2.4% into the close of trading.
European stocks fell 1.8% by the close of Frankfurt trading, with markets getting very little lift from a decisive win for Emmanuel Macron in the second round of France's Presidential elections.
The moves compounded investor concerns, already evident in last week's U.S. market sell-off, which hived 5% from the S&P 500 over a two-day peak-to-trough period, that the Fed's aggressive rate signaling will hit consumer demand sharply over the second half of the year, as bets on a 50 basis point rate hike at the next three policy meetings continue to accelerate.
To hammer home that point, last week saw the largest weekly outflow of equity market funds -- $17.5 billion -- so far this year, according to Bank of America data.
As a result, benchmark 10-year note yields fell to 2.824% by the close of trading in New York trading as investors ran for cover into risk-free markets, taking the U.S. dollar index, which tracks the greenback against a basket of six global currencies, 0.43% higher to a fresh two year high of 101.715.
The moves come ahead of the busiest busiest slate of the first-quarter earnings season this week, with nearly 180 S&P 500 companies updating on March quarter profits ahead for the first look for GDP growth in the world's largest economy on Thursday.
Microsoft (MSFT) Google (GOOGL), Meta Platforms (FB) and Apple (AAPL), the four largest weights to the S&P 500, will report this week, starting with Microsoft after the close of trading on Tuesday, with bluechip industrials such as General Electric (GE), Boeing (BA), as well as oil majors Chevron (CVX) and Exxon (XOM).
With the Fed in its so-called 'quiet period' ahead of its early May policy meeting, investors are also likely to key on the flash estimate of first-quarter GDP on Thursday, with analysts expecting a growth rate of 1.1%, and Friday's reading of the Fed's preferred inflation gauge, the PCE Price Index, which hit a four decade high of 5.4% last month.
Oil prices were also on the back foot, with traders paring bets on near-term demand from China -- the world's largest energy importer -- as a result of its 'zero Covid' policy.
WTI futures for June delivery ended $2.95 lower at $99.12 per barrel while Brent contracts for the same month, the global benchmark, tumbled $3.70 to $102.89 per barrel.
In terms of individual stocks, Coca-Cola (KO) gained 0.8% after it posted stronger-than-expected first quarter earnings Monday, while confirming its full-year profit and sales forecasts, amid what the iconic drinks group called a "highly dynamic and uncertain operating environment".
Activision Blizzard (ATVI) fell 0.7% after it posted weaker-than-expected first quarter earnings Monday in a surprise pre-market release that indicated softer demand for its latest Call of Duty franchise.
