US close: Stocks close higher as investors ignore Boeing selloff

US stocks closed higher on Monday, with the Dow shaking off a triple-digit fall seen earlier in the session as a result of falling Boeing stocks in the wake of yet another tragedy involving one of its 737 Max 8 jets.

At the close, the Dow Jones Industrial Average was up 0.79% at 25,650.88, while the S&P 500 was 1.47% higher at 2,783.30 and the Nasdaq moved picked up 2.02% to 7,558.06.

The Dow closed 200 points higher despite Boeing shares taking a 5.33% hit after a number of airlines grounded Boeing 737 Max 8 jets after an Ethiopian Airlines crash over the weekend left all 157 people on board dead. This was the second crash in five months involving a Boeing 737 Max 8.

James Hughes, chief market analyst at Axi Trader, said: "News of a second tragic accident in a matter of months involving Boeing’s 737 MAX airliner has seen shares in the company come under some extreme selling pressure in pre-market trade.

"This is contributing to some significant losses for Dow futures and as further details of the incident become available, fresh weakness both for the stock and the broader index could be seen."

Hughes said the decision by Chinese regulators to ground local airlines’ fleets of 737 MAX aircraft could be seen as applying a degree of pressure on Washington.

Morgan Stanley said that as regulators and other parties work to find the root cause of the accident, details of which should be forthcoming in days and weeks, it expects another round of volatility for Boeing due to safety concerns.

Nvidia shares were up 6.97% after the tech group said it has agreed to buy Israel's Mellanox in a $6.9bn deal.

Electric car maker Tesla was traded 2.39% after the company reversed a decision to close most of its stores, move to online sales and cut its prices.

Lannett shares picked up 3.94% at the bell as it entered into a strategic marketing alliance with Elite Pharmaceuticals for generic Adderall.

Barrick Gold closed 1.85% stronger, while Newmont Mining dipped 0.74% in the sessions after the former withdrew its $18bn takeover bid and agreed to form a joint venture instead.

On the macroeconomic calendar, US retail sales edged up at the start of the year following an exceptionally weak reading for the month before and some analysts said a detailed analysis showed weakness was being "substantially" overstated.

According to the Department of Commerce, and on a seasonally-adjusted basis, US retail sales volumes grew in January at a pace of 0.2% month-on-month to reach $504.4bn.

That was on top of a downwardly revised drop of 1.6% in the month for December.

Economists had been expecting an unchanged reading for January.

"The official data are subject to endless further revisions, and we remain of the view that eventually they will be revised higher, in keeping with past experience when the numbers undershoot the Redbook," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"To be clear, we are not arguing here that the true rate of growth of retail sales remains at last year's peak; that can't happen, given the fading boost from the tax cuts and the drop in gas prices in Q4. But the December plunge probably overstates the downshift substantially."

Elsewhere, US business inventories increased in December as sales recorded their biggest drop since 2016, pointing to an unplanned stockpile of unsold goods.

Business inventories increased 0.6% after being unchanged in November, said the Commerce Department in a report that had been delayed by the partial government shutdown earlier in the year.