Dow books modest loss after touching record, Nasdaq Composite and small-cap Russell 2000 end higher
The Dow Jones Industrial Average posted minor losses on Monday, surpassing its all-time highs, while the Nasdaq Composite and the small-cap Russell 2000 index ended higher as investors looked for more data on the next phase of economic recovery. was waiting.
How did the major indices perform?
- The Dow Jones Industrial Average (DJIA) fell 126.15 points, or 0.4%, to 34,630.24 from its May 7 session high at 34,777.76.
- The SPX, the S&P 500 index, fell 3.37 points to end at 4,226.52, down 0.1%, but not far from its record close of 4,232.60, which was also held on May 7.
- The Nasdaq Composite Index COMP ended 67.23 points, or 0.5%, at 13,881.72.
- The Russell 2000 RUT Index of small-cap stocks ended 1.4% higher at 2,319.18.
Losses on the S&P 500 were led by a 1.2% decline in material XLB shares and a 0.6% decline for financial XLF.
Shares rose on Friday after a May jobs report, which was lower than expected but showed a pick-up in job creation since April. The Dow rose 0.7% for the week, while the S&P 500 gained 0.6% and the Nasdaq Composite 0.5%.
What drove the market?
Stock indexes ended mixed, with the tech-heavy Nasdaq Composite and the small-cap Russell 2000 booking gains, as investors looked forward to the release of May inflation data on Thursday to gauge the US economy during its most recent phase. to create pricing pressures. health benefit.
"You have a handful of stocks, but the rest of the market is seeing very slow growth," said Sahak Manuelian, Head of Equity Trading at Wedbush Securities. After Friday's rally
AMC Entertainment Holdings Inc. Shares of AMC closed 14.8% higher on Monday, but far from session-best levels, while shares of Gamestop Corp. GME rose 12.7%.
"In some sectors, we are seeing that the reflation trade stocks are giving back a bit," Manuelian told MarketWatch, while pointing to Monday's decline in stocks in the materials and industrials sectors.
Investors are grappling with concerns about the prospect of out-of-control inflation, while also weighing the prospects of a major infrastructure plan that could further stimulate economic growth in a rebound from COVID.
"I think we're in a push-pull market," said Joe Quinlan, head of market strategy at Merrill and Bank of America Private Bank, in an interview with MarketWatch, adding that the stock index is nearing an all-time high. are consolidating, but he also expects another strong round of earnings for US companies in the second quarter.
"We are moving the water, but well at these elevated levels," he said.
Treasury Secretary Janet Yellen said in an interview on Sunday that it would be okay if President Joe Biden's $4 trillion spending plan drives inflation up and leads to higher rates.
"We are fighting inflation that is very low and interest rates that are very low for a decade now," she told Bloomberg. "We want them to "go back to a normal environment," and if it helps ease things down a bit that's not a bad thing — it's a good thing."
After May's employment report fell short of some Wall Street estimates, investors have focused on signs of a slowing recovery for the US labor market, even as employers in the economy continue to fill vacancies. report difficulties in attracting workers to
A team led by Elga Bartsch, head of macro research at BlackRock Investment Institute, wrote in a Monday note, "Economic data has been uncertain, and we expect the same way as economies restart amid a lack of consumer demand and supply." are." .
"We advocate looking at near-term market volatility and remain risk-averse, based on our belief that the Fed faces a very high bar to change its easing monetary policy stance," he said.
Quinlan said he expects the economic data surprise to become "less surprising in the future" and sees signs that markets may already be pricing in the future without the full support of the Federal Reserve, including its $120 billion per share. Includes the last shortfall of the month. bond purchase program.
On Thursday, May is set to release the consumer-price index, which will offer the latest picture on pricing pressures. A jump in April's readings last month stunned investors.
Economic preview: US inflation still climbing and now high labor costs adding to pressure
Meanwhile, the Group of Seven wealthy democracies agreed on Saturday to support a global minimum corporate tax of at least 15%, designed to help multinationals avoid taxes by hiding profits in low-rate countries. is a step. However, the divided U.S. Including Congress, the plan would have to remove the obstacles to implementation.
Biden and Sen. Shelley Moore Capito, R-WVA, were set to meet again on Monday or Tuesday in an effort to reach a bipartisan agreement on infrastructure spending. Biden on Friday rejected Capito's proposal to add about $50 billion to Senate Republicans' $928 billion plan. According to reports, Biden, who last week slashed the size of his infrastructure proposal to $1.7 trillion, told the lawmaker that he would spend at least $1 trillion in new spending at current levels versus $250 billion in the Republican plan. want.
The economic calendar was light on Monday, but consumer-credit data for April showed a third straight modest increase with gains in student loans and auto loans.
Which companies were in focus?
- Facebook Inc. FB stock climbed 1.9% on Monday, ending at a record high and touching an intraday high, as some analysts said a new two-year ban on former President Donald Trump of the social media platform would likely have no financial consequences.
- Shares of Eli Lilly & Co. LLY were up 10.2% for biotech stocks.
- Biogen Inc. Shares of BIIB rose 38.3% after the Food and Drug Administration approved its Alzheimer's drug, boosting shares of other biotechs.
- Amazon.com Inc. Shares of AMZN fell 0.3% after AMZN founder Jeff Bezos said he would be one of the first passengers on his Blue Origin space-travel company's New Shepard spacecraft.
- Tesla Inc. TSLA will pull the plug on its Model S Plaid Plus electric car, chief executive Elon Musk said on Sunday, because the regular Plaid is "very cool." Tesla shares rose 1%.
- A group of private-equity firms reached a deal to acquire Medline Industries Inc., which would value the medical-supply company at more than $30 billion in one of the biggest leveraged buyouts since the financial crisis. Medline said on Saturday that Blackstone Group Inc. BX, Carlyle Group Inc. CG and Hellman & Friedman LLC had reached an agreement to take a majority stake in the company.
- Apple Inc.'s AAPL Annual Worldwide Developers Conference, or WWDC, told the company on Monday about an upcoming upgrade that will make FaceTime a more formidable contender in the world of videoconferencing. Apple is awaiting a verdict on a lawsuit brought by Epic Games, the maker of the popular "Fortnite" game. Apple shares ended unchanged.
How was the rent for the other properties?
- The yield on the 10-year US Treasury note TMUBMUSD10Y was up 1.1 basis points at 1.570%, compared to 1.56% on Friday at 3 pm. Eastern Time.
- The ICE US dollar index DXY, a measure of the currency against a basket of six major rivals, was down 0.2%.
- Oil futures CL00 closed slightly lower with West Texas Intermediate crude for delivery in July, CLN21 down 39 cents, or 0.6%, at $69.23 a barrel. Gold futures GC00 for August delivery GCQ21 closed higher by $6.80, or 0.4%, at $1,898.80 an ounce.
- In European equity trading, the pan-continental Stokes Europe 600 SXXP rose 0.2% to a record 453.56. London's FTSE 100 UKX rose 0.1%.
- In Asia, the Shanghai Composite CN:SHCOMP added 0.2%, while the Hang Seng Index HK:HSI slipped 0.5%; Japan's Nikkei 225 JP:NIK rose 0.3%.