U.S. stocks turned lower Monday as Treasury jumped, paring gains from earlier in the morning as U.S. Treasury yields reversed and climbed higher.
The Dow Jones Industrial Average added 4 points, or 0.01%, while the S&P 500 lost 0.1%. The tech-heavy Nasdaq Composite lost 0.3%.
Markets continued digesting a range of economic news last week showing that inflation was rising even more than expected and workers continued to quit their jobs in search of better opportunities.
That data “added to concerns that inflation at a 30-year high could indeed remain a stickier problem and challenge for businesses, consumers and monetary policy makers to contend with over the next four to six months or even longer” John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said in a note Monday. Several strategists, including Stoltzfus, have said they expect inflation to dampen, however.
“Positive offsets to the current waves of inflation hitting the U.S. economy at this time are likely to emerge as the effects of what may have been overstimulation of the economy at the height of the pandemic fade,” Stoltzfus added.
Sam Stovall, chief investment strategist at CFFRA, said a decline of 5% or more would probably be delayed until next year.
“An expected Q1 2022 peak in headline CPI rise has already likely been priced into equities,” he said. “Should the market decide that inflation will rise farther and longer than currently predicted, however, possibly causing either the Fed to speed up its tapering timetable or the 10-year yield to spike ahead of hotter CPI readings, then the S&P 500 would indeed be vulnerable to a meaningful price decline.”
Tesla shares fell 4.5% Monday following a weekend Twitter exchange between CEO Elon Musk and Sen. Bernie Sanders, in which Musk suggested he’d be willing to sell even more of his shares. Musk sold nearly $7 billion worth of Tesla stock last week.
However, shares of Nasdaq member Dollar Tree jumped 13% following a report Friday that activist investor Mantle Ridge has taken a stake worth at least $1.8 billion in the discount store chain and will push it to do more to add to shareholder value.
Dow component Boeing rose 5% following news that Saudi Arabian Airlines is in talks with Airbus and Boeing for a wide-body jet order. At the same time, Emirates announced an order for two Boeing 777 Freighters at the 2021 Dubai Airshow.
Stocks are coming off a losing week after last month’s consumer price index made its largest annual increase in more than three decades. The major averages snapped a five-week winning streak.
Also, the Labor Department reported that a record 4.4 million workers left their jobs in September, generally a sign they can get something better. Consumer confidence, though, dipped to a 10-year low in November, as consumers apparently flush with cash are growing more worried about inflation.
October’s CPI jumped 6.2% from a year ago, well above the 5.9% estimate from economists polled by Dow Jones. The index, which tracks a basket of consumer products, increased 0.9% on a month-over-month basis, also hotter than expected.
Investors this week will get a look at how much consumers are spending when retail sales data drops Tuesday, while housing numbers come Wednesday with new construction starts and building permits. This also will be a busy week for the Federal Reserve, with multiple officials scheduled to speak through the week.
The major averages are not far from their record highs. The Dow is 1.2% off its all-time high. The S&P 500 and Nasdaq sit 0.8% and 1.5%, respectively, away from their records.
On Monday, President Joe Biden will host a bipartisan bill signing ceremony for the Infrastructure Investment and Jobs Act.
Stocks are coming off a losing week after October’s consumer price index saw its largest annual increase in more than three decades.