Stock Market Today: Stocks Close Mixed on Rate Hike Jitters

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Stocks closed mixed Monday in a quiet session following a long holiday weekend.

Traders and investors largely focused on last week's March jobs report, which was released when the market was closed for Good Friday. Although payrolls expanded by the lowest number in more than two years, continuing labor market strength is predicted to push the Federal Reserve to raise interest rates at the next Fed meeting.

Ultimately, the specter of rising rates, the release of the Consumer Price Index (CPI) slated for later this week and some downbeat news out of the tech sector restrained sentiment.

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Not too long ago, equity markets figured that the banking crisis hammering shares in regional bank stocks would force the Fed to pause its campaign of rate hikes. But the economic data and certain global developments haven't been cooperating. Among the more notable recent events, OPEC and its allies announced a surprise cut to crude oil production. Although that's good news for the best oil stocks, rising energy prices are inflationary in the shorter term and could help tip the U.S. into recession later this year.

As for the March jobs report, it showed that the employment situation remains too robust for the Fed's comfort.

"The market seems convinced the Fed will increase in May," says Louis Navellier, chairman and founder of Navellier & Associates. "While the inflation trends are falling, they will very likely remain far above the Fed's 2% target."

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The Fed also wants to see a meaningful increase in the unemployment rate, Navellier adds, which it sees as necessary to break a wage-price inflation spiral from becoming embedded. "But while wage growth has slowed noticeably, unemployment remains at 50-year lows," he notes.

And then there's the next CPI report. Wednesday's release of the Consumer Price Index (CPI) for March is forecast to show headline inflation rose 5.2% year-over-year. Interest rate traders already assign a 70% probability to the Fed raising interest rates by a quarter of a percentage point next month. Should the inflation data exceed expectations, the odds of another rate hike would presumably rise even higher.

Single-stock news did little to help markets on Monday, as well. Shares in Apple (AAPL, -1.6%) dropped after the company said shipments of its personal computers declined by more than 40% in the first quarter. (Shipments by all PC makers combined fell 29% in Q1, reversing gains made during the peak of the pandemic-induced work-from-home era.)

Mac sales had been holding up relatively well during an industrywide slump, but sputtering demand finally caught up with the company. Indeed, Q1 represented the steepest drop in Mac shipments since the final quarter of 2000.

Fellow Dow stock Microsoft (MSFT, -0.8%) slipped in sympathy, as did shares in Oracle (ORCL, -1.9%) and Adobe (ADBE, -1.1%).

By session's end, the tech-heavy Nasdaq Composite was the day's only loser, shedding 0.03% to finish at 12,084. The blue-chip Dow Jones Industrial Average ticked up 0.3% to close at 33,586, while the broader S&P 500 added 0.1% to end at 4,109.

Buy the best dividend stocks on sale?

Inflation data is in focus this week, with the next CPI report slated for release on Wednesday and the Producer Price Index (PPI) – a measure of wholesale inflation – due out Thursday. While these reports have the potential to spark increased volatility in the sessions ahead, long-term investors are by no means obliged to go along for the ride.

That said, while sitting tight is often the best strategy when markets become hyperactive, there's nothing wrong with going bargain hunting if compelling opportunities present themselves.

To that end, buy-and-hold investors might want to take advantage of any weakness in the best dividend stocks for dividend growth. By the same token, income investors might want to check out stocks with the highest dividend yields in the S&P 500, should they also go on sale.

Lastly, there's nothing wrong with buying the dip in the best blue chip dividend stocks, which have been generating outperformance since the bear market began.

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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.

A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about markets and macroeconomics.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.