U.S. stocks on Monday had given up their slight gains and were trading mixed, though moves remained small as Wall Street comes off a historic week that saw its benchmark S&P 500 (SP500) index achieve some major milestones. Traders geared up for a week that will feature some key economic data and a slew of Federal Reserve speakers.
The Nasdaq Composite (COMP.IND) was last down 0.30% to 15,942.96 points in afternoon trade, having earlier risen as much as 0.5%. If the tech-heavy gauge had held onto those gains, it would have likely set a new record closing high, more than two years after it previously set that mark at 16,057.44 points on November 19, 2021.
The blue-chip Dow (DJI) added 0.31% to 38,793.48 points. The S&P (SP500) had reversed course and was now lower by 0.07% to 5,023.25 points, after having crossed and closed above the 5,000 points mark for the first time ever last week.
Of the 11 S&P sectors, seven were in the green.
Equities have been on a tear after starting off the year on shaky ground, largely due to an advance in technology stocks. The “Magnificent 7” club in particular has seen tremendous gains, and grabbed some headlines on Monday as well after chip giant Nvidia (NVDA) briefly overtook tech and retail behemoth Amazon (AMZN) in terms of market value to become the fourth biggest publicly listed U.S. firm.
Tuesday’s consumer price index (CPI) report will be closely watched, as market participants try to assess when the Fed will finally start cutting interest rates. Thursday’s retail sales data will also be an indicator of the economy’s strength and the health of consumer spending.
“We expect that seasonal adjustment factors—which may have flattered December retail sales—will present a headwind to January retail sales, and we look for total sales to slip 0.9% and sales in the important control category to be flat,” JPMorgan’s Michael Feroli said on Friday.
“For the CPI we expect declining energy prices will limit the headline figure to just a 0.1% increase, which would take the year-ago gain down to 2.9% from 3.4% in December. We also look for a high-side 0.2% increase in the ex-food and energy core measure, held down by an expected decline in used vehicle prices,” Feroli added.
Monday’s economic calendar was light, but the one indicator that did come in was a favorable one. According to the New York Fed’s survey of consumer expectations for January, three-year ahead inflation expectations returned to their lowest levels seen before the COVID-19 pandemic.
Treasury yields, like stocks, made small moves to kick-off the week. The longer-end 30-year yield (US30Y) was down 1 basis point to 4.37%, while the 10-year yield (US10Y) was down 2 basis points to 4.16%. The shorter-end more rate-sensitive 2-year yield (US2Y) was also down 2 basis points to 4.47%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Today also lived up to its moniker of “merger Monday,” with two notable deal announcements. Diamondback Energy (FANG) agreed to merge with Endeavor Energy Resources, the largest privately-held oil and gas company in the Permian Basin, in a deal valued at about $26B. Diamondback (FANG) stock surged more than 10% and was among the top percentage gainers on the S&P 500 (SP500).
The fourth quarter earnings season will continue to be in focus this week, though the volume of companies reporting will begin to slow down. Also grabbing some attention will be 13F filings – regulatory disclosures by major funds of their quarterly equity ownership changes.