U.S. stocks traded mixed Monday, while Treasury bond yields steadied and the dollar gave back gains against its global peers, as investors braced for a series of headline risks this week as they look to extend last week's rally into the final months of the year.
Stocks powered firmly higher in Friday, paced by outsized gains for mega-cap tech stocks and tame Treasury bond yields, notching their second consecutive weekly advance into the tail-end of the third quarter earnings season.
Markets face another series of stern tests this week, however, in the form of October inflation data on Tuesday, retail sales figures on Thursday, and headlines from a key face-to-face meeting between President Joe Biden and President Xi Jinping at the Asia-Pacific Economic Cooperation summit in San Francisco.
Retail gains Home Depot HD, Target TGT and Walmart WMT will also update on October quarter earnings, as well as their holiday-season outlook, starting Tuesday.
Markets are very likely to remain focused on moves in the bond market, as well, following volatility tied to benchmark Treasury auctions last week and a late Friday move by Moody's Investors Service to lower their outlook on the U.S. debt rating to 'negative' from 'stable', noting that "downside risks to the US' fiscal strength have increased and may no longer be fully offset by the sovereign's unique credit strengths."
Benchmark 10-year Treasury note yields were little-changed from Friday levels, however, and traded 2 basis point higher at 4.640% in early New York trading, while 2-year notes nudged 1 basis points higher to 5.047%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.16% lower at 105.689 even as the dollar hit a fresh one-year high of 151.78 against the yen in overnight trading.
"Two weeks after falling to its lowest low since May, the S&P 500 ended last week at a nearly two-month high," said Chris Larkin, managing director for trading and investing at E*TRADE from Morgan Stanley. "Whether it will be able to extend the push above its October highs remains to be seen, but this week has enough high-profile economic data to tilt the market either way."
"Most eyes will be focused on the latest inflation numbers, but retail sales and retail earnings will also help set the tone," he added. "And the market may be a little more jittery than usual, coming off Friday’s downgrade of US credit and the possibility of a government shutdown at the end of the week."
Global oil prices were muted, as well, ahead of delayed Energy Department data on domestic crude stockpiles and exports later in the week, following a third consecutive weekly decline that was capped in late Friday trading.
Brent crude futures contracts for January delivery, the global pricing benchmark, were marked 83 cents higher at $82.26 per barrel while WTI futures for December were up 84 cents at $78.01 per barrel.
On Wall Street, the S&P 500, which is up 5.28% so far this month, was marked 2 points lower heading into the final hours of trading while the Dow Jones Industrial Average rose 80 points, buttressed by a 4.6% gain for Boeing BA.
The tech-focused Nasdaq, which has surged 7.37% so far this month, was down 30 points.
In Europe, the Stoxx 600 was marked 0.75% higher by the close of Frankfurt trading, while Britain's FTSE 100 gained 0.89% in London amid some major changes in the senior leadership of Prime Minister Rishi Sunak.
In Asia, the late-session decline for the yen took some steam out of early gains for the Nikkei 225, with the benchmark trimming its session gain to just 0.05% by the close of trading.
Solid gain for China stocks, linked in part to the recent detente between Washington and Beijing, helped the region-wide MSCI ex-Japan index to a 0.55% gain heading into the final hours of trading.
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