(MarketWatch) — The S&P 500 and Nasdaq Composite indexes closed lower, limiting wins to two days in a row, while Dow industrials also gave up earlier gains, as investors remain focused on rising inflation and its impact on yields for government debt and borrowing costs.
Dow industrials had been buoyed earlier in the day by shares of Boeing Co., the aerospace giant, which reported a number of orders for its planes from the 2021 Dubai Airshow.
- The Dow finished lower -12.86 or -0.04%
- The S&P 500 closed marginally lower -0.05 or -0.00%
- The Nasdaq finished -7.11 or -0.04%
Monday’s modest pullback in equities came as Treasury yields jumped across the board on expectations that the Federal Reserve may have to taper its monthly bond purchases at a faster-than-anticipated pace, given signs of persistent inflation. Tapering is the prerequisite first step before a rate increase, and policy makers could facture next year over when to deliver the first hike.
Concerted moves of small magnitude aren’t common, with the last time all three major indexes ending less than 0.05% off their prior close was Sept. 14, 2018, according to Dow Jones Market Data.
All three major stock indexes dropped on Monday after having started out on a relatively bullish footing, with a report on New York state manufacturing activity boosting sentiment on Wall Street.
The New York Fed’s Empire State manufacturing business conditions index rose 11.1 points to 30.9 in November, the regional Fed bank said Monday. Economists had expected a reading of 22, according to a survey by The Wall Street Journal.
Strong third-quarter earnings have been a pillar of this recent run-up in equities, with consumers central to the economic rebound from the debilitating COVID-19 crisis.
Last Friday’s University of Michigan consumer-sentiment surveyshowed inflation weighing on consumer attitudes, though it isn’t clear that will translate into weaker spending. The October retail sales report is due Tuesday, and the median forecast of economists is for a 1% gain in the reading that excludes autos.
The inflation backdrop makes the next choice of Federal Reserve chair all the more important politically for President Joe Biden. The Wall Street Journal reported that Biden is said to be deciding between reappointing Chairman Jerome Powell or choosing Fed Gov. Lael Brainard as early as this week. Biden interviewed both candidates earlier this month, and the meeting with Brainard was described by people familiar with the matter as going better than expected, the report said.
Biden also signed the $1 trillion infrastructure bill into law Monday afternoon. He’s also due to hold a virtual meeting with Chinese President Xi Jinping in the evening.
Meanwhile, European Central Bank President Christine Lagarde told the European Parliament that the central bank expects inflation to moderate next year, though prices will take longer to decline than originally expected. She also said that it was “very unlikely” conditions would be met by next year that would allow for an interest-rate hike. European inflation data is due for release this week.
- Share of WeWork Inc. WE were in focus after the flexible workspace company reported its first quarterly report since going public last month through a merger with a special-purpose acquisition company, or SPAC, with losses narrowing but revenue falling. WeWork shares rose 3.4%.
- Shares of Boeing rallied 5.5% after the company said it signed an order with Icelease for 11 of its 737-800 Boeing Converted Freighters, while logistics company DHL Express placed an order for nine more 767-300BCF and Emirates announced an order for two 777 Freighters.
- Oatly Group AB OTLY shares plunged 20.8% in Monday trading after the plant-based beverage company reported a third-quarter revenue miss and issued a revenue warning for the year.
- Restaurant Brands International Inc. QSR said Monday that it has agreed to acquire Firehouse Subs, a sub sandwich chain founded in Jacksonville, Fla., for $1 billion in cash, funded through cash-on-hand and debt. Restaurant Brand shares rose 2.1%.
- The U.S. WTI oil contract CLZ21 for December settled at $80.88 a barrel, gaining 0.1%.
- December gold futures GC00 retreated 0.1% to settle at $1,866.60 an ounce, the first loss in eight sessions.
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