Stock Market Fades; Warren Buffett Buys Insurer; Boeing Drops After Plane Crash

After enjoying the best week since November 2020, the stock market gave back some gains Monday morning. Warren Buffett’s Berkshire Hathaway (BRKB) announced a major deal, while Boeing (BA) shares slid after a plane crash in China.

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Stock market indexes opened higher. But the Nasdaq composite slid 0.7% around 10 a.m. ET. The S&P 500 was down 0.2%. Volume fell on the Nasdaq and NYSE compared with the same time on Friday.

The Dow Jones Industrial Average gave back 0.3%. Boeing fell 5.5% in heavy trading after a 737-800 plane operated by China Eastern Airlines crashed into a mountain area of the Guangxi region. There was no immediate word on casualties. The plane was carrying 132 people. Broadcast footage showed smoke from the crash site.

The plane is not the 737-Max model that was grounded for many months after two deadly crashes. Yet, it’s another cloud on Boeing’s commercial plane business. The stock this month had been rebounding from a November 2020 low.

Most S&P sectors rose, led by energy. Energy Select Sector SPDR (XLE) rose 3% to extend a rebound. The materials sector rose 1%. Technology and internet stocks lagged.

Oil Climbs, Buffett Buys Alleghany

The price of U.S. crude oil jumped 4.4% to $109.31 a barrel. Last week, oil fell to around $95, and started to rebound from that level.

Berkshire Hathaway (BRKB) rose 1.8% after the company announced it agreed to acquire insurer Alleghany (Y) in a deal valued at $11.6 billion. Berkshire — billionaire Warren Buffett’s investment firm — said it is paying $848.02 a share in cash. That’s a 25% premium to Alleghany’s closing price on Friday.

Shares of Alleghany, which has expanded from property and casualty insurance to noninsurance businesses, soared 25% in huge volume.

Innovator IBD 50 ETF (FFTY) added 1%. Energy, shipping and cyclical stocks led the IBD 50.

Greek shipping company Costamere (CMRE) followed through after it cleared the 16.75 buy point of a cup with handle on Friday. Volume was heavy Monday as well. Costamere is in a buy zone to 17.59. Steelmaker Cleveland-Cliffs (CLF) made a new high.

Tesla (TSLA), which closed back above the 50-day moving average for the first time since Jan. 12, rose 3.7%. It was one of the five biggest gains in the IBD 50.

Stock Market Outlook Improving

Last week, the Nasdaq and S&P 500 made their best gains since November 2020. The Nasdaq shot up 8.2% while the S&P 500 surged 6.2%. Both indexes made follow-through rally confirmations during the week, which changed IBD’s market outlook to “confirmed uptrend.”

While the market remains volatile, some opportunities are emerging in shipping, energy, health care and other areas.

European markets were mixed. The London FTSE 100 rose 0.7%, the Paris CAC 40 fell 0.2% and the German DAX eased 0.1%.

Chinese stocks cooled off after an outstanding week. The Hong Kong Hang Seng Index fell 0.9% and the Shanghai Composite rose 0.1%. The Tokyo Nikkei 225 was closed.

KraneShares China Internet ETF (KWEB), which skyrocketed nearly 29% last week, fell 6.2%. The iShares China Big Cap ETF (FXI) fell 4.5%.

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