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

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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,
+ 0.18%
equities and a 0.6% drop in those of XLF financials,
-0.26%.

On Friday, stocks rose after an employment report in May which is below expectations 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 pricing pressures 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,
+ 0.09%
closed 14.8% higher on Monday, but off the best levels of the session, while those of GameStop Corp. GME,
+ 7.14%
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 of 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 struggled for a decade against too low inflation and too low interest rates,” 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 US labor market, after May Employment Report below some Wall Street estimates, although employers across the economy are reporting difficulty attracting workers to fill vacancies.

“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 rise and rising labor costs are now increasing the pressure

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

Biden and Senator Shelley Moore Capito, RW.Va., were to see you 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 with April consumer credit data showing a third modest increase in a row, with gains in student debt and auto loans.

Which companies were the center of attention?
  • Facebook Inc.
    FB,
    -0.86%
    the stock rose 1.9% on Monday, ending at a record high and touch an intraday high, as a few analysts have said, the social media platform new two-year ban former President Donald Trump is unlikely to have any financial consequences.
  • Eli Lilly and company
    THERE IS,
    -0.82%
    shares rose 10.2% on a bullish day for biotech stocks.
  • Biogen Inc. BIIB,
    -0.12%
    shares jumped 38.3% after Food and Drug Administration approved its Alzheimer’s disease drug, giving a boost to the actions of other biotechs.
  • Actions of Amazon.com Inc. AMZN,
    + 2.07%
    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.
    TSLA,
    -0.25%
    will unplug on its Model S Plaid Plus electric car, chief executive Elon Musk said Sunday, because the 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 supply company over $ 30 billion, in one of the biggest LBOs since the financial crisis. Medline said on Saturday that Blackstone Group Inc.
    BX,
    + 0.22%,
    Carlyle Group Inc.

    CG,
    +1.98%
    and Hellman & Friedman LLC had entered into an agreement to take a controlling stake in the company.

  • Apple Inc.
    AAPL,
    + 0.67%
    Annual World Developer Conference, or WWDC, started on Monday with the company touting the upcoming upgrades that will make FaceTime a more formidable competitor in the world of videoconferencing. 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 was up 1.1 basis points to 1.570%, from 1.56% on Friday at 3 p.m. ET.

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

  • Oil futures CL00 closed slightly lower, with West Texas Intermediate crude for delivery in July CLN21,
    + 0.63%
    39 cents, or 0.6%, to settle at $ 69.23 per barrel. Gold Futures GC00 for delivery in August GCQ21,
    + 0.14%
    climbed $ 6.80, or 0.4%, to $ 1,898.80 an ounce.

  • In European equity trading, the pan-Continental Stoxx Europe 600 SXXP rose 0.2% to close at a record 453.56. London FTSE 100 UKX increased 0.1%.

  • In Asia, the Shanghai Composite SHCOMP,
    + 0.40%
    added 0.2%, while the Hang Seng HSI index,
    -0.07%
    slipped 0.5%; Nikkei 225 NIK from Japan,
    -0.34%
    increased by 0.3%.

William Watts contributed reporting

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