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U.S. equities on Monday were largely positive, as technology stocks rebounded from their recent decline. Market participants geared up for key economic data later this week in the form of retail sales and industrial production.
Investors also eyed further clues about the Federal Reserve’s future monetary policy actions. Finally, traders will get an idea of the state of the U.S. consumer via quarterly results from giants Walmart (WMT), Target (TGT) and Home Depot (HD).
Approaching mid-day, the tech-heavy Nasdaq Composite (COMP.IND) was 0.80% higher to 13,754.39 points, helped by strength in chip stocks and megacap technology names. The benchmark S&P 500 (SP500) was up 0.49% to 4,486.10 points. Both averages are coming off two straight weeks of losses.
The Dow (DJI) trailed the other two indexes, rising 0.13% to 35,327.16 points. The blue-chip gauge was weighed down by industrial conglomerate 3M (MMM).
Of the 11 S&P sectors, six were in positive territory, led by a more than 1% gain in Technology. Utilities and Energy topped the losers.
The benchmark S&P 500 (SP500) slipped last week, extending an overall decline for markets in August. One of the main factors contributing to the drop was mixed data on inflation. The consumer price index held steady in July, but the producer price index came in hotter than forecast. The data did little to alter market expectations, with the Fed widely anticipated to hold rates steady at its monetary policy committee meeting in September.
Minneapolis Fed President and FOMC member Neel Kashkari will be speaking on Tuesday at a conference, and his comments will be parsed for any clues about future Fed policy actions. The minutes of the central bank’s July meeting will be published on Wednesday, which could give an idea on which committee members are leaning towards holding rates steady. The Jackson Hole Economic Policy Symposium next week will also be in the spotlight.
“It will likely be way too early for Chair Powell (at Jackson Hole) to declare victory on inflation and too early to declare the hiking cycle is over. Instead, recent news may be welcome, but there remains a long road ahead,” UBS’ Jonathan Pingle said in a note on Friday. “We expect a more fully fleshed out version of the Chair’s July FOMC meeting press conference comments.”
“The CPI report likely lifted the spirits of FOMC participants, but at the same time they are not out of the inflation woods yet. Separately, restrictive for longer is not the same as higher for longer, FRB of New York President Williams implied (last) week. While guidance for the nominal funds rate might be nice, instead FOMC speakers seem to be providing guidance for the real rate. That makes some sense if you want to set policy to push inflation back down to target. That also makes setting the nominal funds rate data dependent, as the FOMC says,” Pingle added.
Treasury yields were mixed on Monday, following another volatile week which saw the longer-end 10-year yield (US10Y) post its highest weekly close in nine months. The instrument was last unchanged at 4.17%, while the more rate-sensitive 2-year yield (US2Y) was up 5 basis points to 4.95%.
Treasury auctions last week attracted significant attention, with the auctions seen as a test of greater supply on the market after the government boosted its funding targets to add $19B in new cash raised. The 3-year auction and the 10-year auctions were perceived as strong, but a tough 30-year auction tempered some of that positivity.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Monday’s economic calendar saw the New York Fed’s measure of consumers’ year-ahead inflation expectations mark its fourth straight monthly decline to its lowest level in two years.
Turning to active movers, Hawaiian Electric Industries (HE) slumped 35% after reports over the weekend that the company’s utility in Hawaii did not have a plan to shut off power in order to cut fire risks.
