Dow posts modest loss after hitting record, Nasdaq Composite and small cap Russell 2000 end higher

The Dow Jones Industrial Average posted a modest loss on Monday, after briefly breaking its all-time high, while the Nasdaq Composite and the Russell 2000 small-cap index ended higher as investors waited for more data on the next step in economic recovery.

Losses on the S&P 500 were led by a 1.2% drop in XLB materials,
equities and a 0.6% drop in those of XLF financials,

Shares rose on Friday following a May jobs report that was lower than expected but showed a pickup in job creation from April. The Dow Jones rose 0.7% for the week, while the S&P 500 gained 0.6% and the Nasdaq Composite rose 0.5%.

What drove the market?

Equity indices ended mixed, with reservation gains for the Nasdaq Composite and small-cap Russell 2000, as investors eagerly awaited the release of May inflation data on Thursday to help assess the pressures on the prices that accumulate during the last stage of the US economy. recovery.

“You have a handful of stocks going crazy, but the rest of the market has been going very slowly,” said Sahak Manuelian, head of equity trading at Wedbush Securities, adding that the summer slump seems to be setting in. after the rally on Friday.

AMC Entertainment Holdings Inc. AMC Shares,
+ 14.80%
closed 14.8% higher on Monday, but off the best levels of the session, while those of GameStop Corp. GME,
+ 12.74%
increased by 12.7%.

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“In some areas, we are seeing reflation trade stocks pulling back a bit,” Manuelian told MarketWatch, while pointing to the stock pullback Monday in the materials and industrials sectors.

Investors have been grappling with concerns about the potential for runaway inflation, while also weighing the prospects for a major infrastructure plan that could further boost economic growth in the COVID rebound.

“I think we’re in a push-pull market,” said Joe Quinlan, head of CIO market strategy for Merrill and Bank of America Private Bank in an interview with MarketWatch, adding that stock indexes are consolidating near All-time highs, but that US companies are also expected to generate another round of strong second-quarter earnings.

“We are walking on water, but well at these high levels,” he said.

Treasury Secretary Janet Yellen said in an interview on Sunday that it would be acceptable for President Joe Biden’s $ 4 trillion spending plans to raise inflation and lead to higher rates.

“We have been fighting too low inflation and too low interest rates for a decade now,” she told Bloomberg. “We want them to go back to ‘normal surroundings’,” and if that helps alleviate a bit, that’s not a bad thing – it’s a good thing. “

Investors also focused on signs of a slowing recovery in the U.S. labor market, after May’s jobs report fell below some Wall Street estimates, even as employers in the the economy as a whole is reporting difficulties in attracting workers to fill vacant positions.

“Economic data has been erratic, and we expect more of the same as economies reboot amid pent-up consumer demand and supply shortages,” wrote a team led by Elga Bartsch, head of macro research at BlackRock Investment Institute, in a Monday note.

“We advocate looking at short-term market volatility and staying pro-risk, based on our belief that the Fed faces a very high bar to change its accommodative monetary policy,” she said.

Quinlan said he expects surprises in economic data to become “less surprising in the future” and sees signs that markets could already predict a future without the full support of the Federal Reserve, including including the eventual reduction of its $ 120 billion per month. bond buying program.

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On Thursday, the May Consumer Price Index is slated for release, which will offer the latest picture on price pressures. A jump in the April reading last month rocked investors last month.

Economic overview: US inflation continues to climb, rising labor costs add to the pressure

Meanwhile, the Group of Seven Wealthy Democracies on Saturday agreed to support a global minimum corporate tax of at least 15%, a measure designed to deter multinational companies from avoiding taxes by hiding their profits in countries with low rate. However, the plan must overcome obstacles to its implementation, including a divided US Congress.

Biden and Senator Shelley Moore Capito, RW.Va., were due to meet again on Monday or Tuesday to try to reach a bipartisan agreement on infrastructure spending. Biden on Friday rejected an offer by Capito to add about $ 50 billion to the Senate Republicans’ $ 928 billion plan. Biden, who last week reduced the size of his infrastructure proposal to $ 1.7 trillion, told lawmakers he wanted at least $ 1 trillion in new spending from current levels from $ 250 billion. dollars in the Republican plan, according to reports.

The economic calendar was light on Monday, but April’s consumer credit data showed a third consecutive modest increase, with increases in student debt and car loans.

Which companies were the center of attention?
  • Facebook Inc.
    The stock climbed 1.9% on Monday, ending at a record high and reaching an intraday high, as a few analysts said the social media platform’s new two-year ban defeats the former President Donald Trump would likely have no financial consequences.
  • Eli Lilly and company
    + 10.15%
    shares were up 10.2% on a bullish day for biotech stocks.
  • Biogen Inc. BIIB,
    + 38.34%
    shares jumped 38.3% after the Food and Drug Administration approved its Alzheimer’s drug, giving shares of other biotechs a boost.
  • Actions of Inc. AMZN,
    fell 0.3% after founder Jeff Bezos said he would be one of the first passengers on the New Shepard spacecraft from his space travel company Blue Origin.

  • Tesla Inc.
    + 1.01%
    will unplug its Model S Plaid Plus electric car, chief executive Elon Musk said on Sunday, because regular Plaid is “so good.” Tesla shares rose 1%.
  • A group of private equity firms have reached an agreement to acquire Medline Industries Inc. that would value the medical supplies company at over $ 30 billion, in one of the largest debt buyouts since the financial crisis. Medline said on Saturday that Blackstone Group Inc.
    Carlyle Group Inc.
    + 0.39%
    and Hellman & Friedman LLC had entered into an agreement to take a controlling stake in the company.

  • Apple Inc.
    + 0.01%
    The annual Global Developer Conference, or WWDC, kicked off Monday with the company touting upcoming upgrades that will make FaceTime a more formidable competitor in the video conferencing world. Apple is awaiting a decision on a lawsuit brought by Epic Games, the maker of the popular game “Fortnite”. Apple shares ended up unchanged.
How did the other assets behave?
  • The yield on the 10-year US Treasury bill TMUBMUSD10Y rose 1.1 basis points to 1.570%, from 1.56% on Friday at 3:00 p.m. EST.

  • The ICE US Dollar Index DXY, a measure of the currency against a basket of six major rivals, fell 0.2%.

  • CL00 oil futures closed slightly lower, with West Texas Intermediate crude for July delivery CLN21,
    + 0.06%
    39 cents, or 0.6%, to settle at $ 69.23 per barrel. GC00 gold futures for delivery in August GCQ21,
    + 0.16%
    climbed $ 6.80, or 0.4%, to $ 1,898.80 an ounce.

  • In European equity trading, the pan-continental Stoxx Europe 600 SXXP index rose 0.2% to close at a high of 453.56. London’s FTSE 100 UKX rose 0.1%.

  • In Asia, the Shanghai Composite SHCOMP,
    + 0.21%
    added 0.2%, while the Hang Seng HSI index,
    slipped 0.5%; Nikkei 225 NIK from Japan,
    + 0.27%
    increased by 0.3%.

William Watts contributed reporting

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