U.S. stocks traded modestly lower on Monday, reversing course from earlier in the day, as investors digested a fresh wave of earnings releases and awaited key inflation data due later this week.
The Dow Jones Industrial Average DJIA, +0.27% slipped 22 points, or less than 0.1%, to 35,068.
The S&P 500 SPX, +0.08% fell 9 points, or 0.2%, to 4,491.
The Nasdaq Composite Index COMP, +0.05% dropped 43 points, or 0.3%, to 14,055.
On Friday, the Dow ended slightly lower, while the S&P 500 and Nasdaq each gained after a much stronger-than-expected January jobs report. The S&P 500 and Nasdaq posted their strongest weekly gains since late December.
What’s driving markets
All three major stock indexes turned lower on Monday, reversing course from earlier in the New York session, as investors continued to digest the implications of the surprisingly strong 467,000 gain in nonfarm payrolls in January and looked toward Thursday’s consumer-price index report for January. The median forecast for the report is for a 7.2% headline, year-over-year gain.
“Right now, this market is just focused on one thing: inflation,” said Ed Moya, a senior market analyst for the Americas at OANDA Corp. “You’re probably going to see some readjustment of portfolios — a little bit of a relocation on how heavy one wants to be on tech stocks,” for example.
“As far as the market goes for today, we’re trying to see what type of trading range will be put into place,” he said, in a phone interview. “It’s a long time until Thursday’s inflation report. Nothing is going to move us in a major way in either direction until we get to later this week, and the market should be rather calm.”
According to RBC Capital Markets, 47% of the S&P 500 companies that have reported so far have seen their share prices fall 1% or more in the one day trading session immediately post results, though that is better than the 63% that saw negative movements after earnings two weeks ago.
“The resiliency of earnings remains a comforting data point and supports the idea that we’ve seen the lows in the stock market for the time being,” said Lori Calvasina, head of U.S. equity strategy at RBC.
Other market watchers also saw reasons to be optimistic.
“As overly bearish sentiment clears, we expect the market to lift,” said strategists led by Marko Kolanovic of JPMorgan Chase & Co., in a note. “However, we see volatility moderating and expect strong equity inflows from systematic investors (e.g. risk parity, volatility targeting), as well as corporate buybacks that are increasing after recent earnings-related blackout periods.”
Which companies are in focus?
Frontier Group Holdings Inc. ULCC, +3.23% agreed to buy Spirit Airlines Inc. SAVE, +16.59% in a deal valued at $6.6 billion that unites two of the country’s largest low-fare carriers. Shares of Frontier were up 0.7%, while those for Spirit were up nearly 14%, at last check.
Peloton Interactive PTON, +19.15% shares soared over 17%. The stationary-bike maker is said to be drawing interest from potential suitors, The Wall Street Journal reported, citing people familiar with the matter.
Shares of Hasbro Inc. HAS, +0.13% were in focus after the toy maker raised its dividend and its quarterly profit beat expectations. Its stock was down 0.6%.
Spotify Technology SPOT, -1.42% was in focus again after Chief Executive Daniel Ek apologized for the backlash that has followed the emergence of Joe Rogan’s use of a racial slur in previous podcast episodes. Shares were down 2.1%.
How are other assets faring?
The yield on the 10-year Treasury note TMUBMUSD10Y, 1.918% was around 1.93%, hanging around its highest rate since December 2019.
The dollar was up by less than 0.1% as measured by the ICE U.S. Dollar Index DXY, +0.09%, a measure of the buck against a half-dozen currencies.
West Texas Intermediate crude for March delivery CLH22, -1.34% fell 98 cents, or 1.1%, to $91.33 a barrel on the New York Mercantile Exchange.
April gold GCJ22 was $12.60, or 0.7%, higher to trade at $1,820.30 an ounce.
In European equities, the Stoxx Europe 600 SXXP, +0.68% closed up by 0.7%, while London’s FTSE 100 UKX, +0.76% finished 0.8% higher.
China’s CSI 300 XX:000300 and the Shanghai Composite CN:SHCOMP ended higher by 1.5% and 2%, respectively. Meanwhile, the Hang Seng Index HSI, +0.03% finished marginally up and Japan’s Nikkei 225 NIK, -0.70% closed 0.7% lower.
— Mark DeCambre contributed to this article