U.S. stocks were mixed Monday afternoon ahead of important inflation data in coming days, while investors gauged the possibility of a shutdown of the federal government later this week.
The Dow Jones Industrial Average
was up 82 points, or 0.2%, at 34,365.
The S&P 500
was little changed at 4,415.
The Nasdaq Composite
shed 21 points, or almost 0.2%, to reach 13,777.
On Friday, the Dow, S&P 500 and Nasdaq Composite rose to score back-to-back weekly gains.
What’s driving markets
The S&P 500 has jumped 7.2% over the two weeks that ended on Friday, helped by benchmark borrowing costs
falling swiftly from 16-year highs on hopes that inflation can ease further and that the Federal Reserve is finished with its campaign of interest-rate increases.
However, after that strong rally, a more cautious tone prevails at the start of the new week as the market awaits the U.S. consumer-price-index report for October, due on Tuesday, which has the ability to underpin the latest bull run or bring it to a halt. Five- through 30-year Treasury yields were back on the rise, with the rate on the 10-year note up less than 1 basis point at 4.638%.
Read: Stock-market rally faces make-or-break moment. How to play U.S. October inflation data.
Economists expect core CPI growth — a measurement that strips out volatile items such as food and energy — to remain steady at 0.3% month over month, although Wall Street sees the chance of a higher-than-expected annual core rate of 4.2%.
See: This week’s October inflation data looms large on Washington’s economic radar
The producer-price report for October will be published on Wednesday. October retail-sales data is also on the docket this week and will offer further clues to the health of the consumer on Wednesday.
“We obviously have a big inflation data print tomorrow and think markets will generally get what they’re looking for, which is a slow decline in headline inflation,” said John Luke Tyner, a portfolio manager at Alabama-based Aptus Capital Advisors, which manages about $5 billion. “But there’s still a tug of war playing out, with markets getting ahead of the Fed and betting on inflation coming down faster than expected and on rate cuts occurring sooner rather than later.”
Meanwhile, worries over a dysfunctional government contributed to Moody’s Investors Service late Friday cutting its outlook on the U.S. sovereign credit rating to negative from stable.
While the decision by Moody’s is “important,” the possibility of a partial shutdown of the federal government this week is what’s leading to a “more jittery feel” in markets, Tyner said via phone on Monday.
Also see: House Republicans look to pass two-step package to avoid partial government shutdown
This week, “we will plunge back into the U.S. political saga, as the government short-term-funding deadline is due 17th of November and not much progress has been made to seal a fresh deal,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“Depending on the new funding resolution — or the lack thereof — we could see the U.S. 10-year yield return above 4.8%,” Ozkardeskaya added.
Investors will also be keeping an eye out for a slew of reports from retailers, including Home Depot Inc.
on Tuesday, Target Corp.
on Wednesday and Walmart Inc.
on Thursday, as third-quarter earnings season comes to an end. Their comments on the health of the consumer may also play into thinking about the Fed.
Earnings Watch: Retail earnings begin this week. ‘It’s getting worse,’ an analyst says.
Through Friday, 92% of S&P 500 companies had reported third-quarter results, according to FactSet. Of those that reported, 81% saw a positive surprise on earnings, while 61% reported a positive surprise on revenue. The year-over-year growth rate for the S&P 500 in the third quarter was on track to come in at 4.1%, according to FactSet, which if realized would mark the first quarter of positive year-over-year growth since the third quarter of last year.
The U.S. federal-budget update for October will be published at 2 p.m. Eastern time.
Companies in focus
Shares of Dow component Boeing Co.
rose 5.1% after a flurry of news. Bloomberg reported Monday that the Chinese government is close to lifting a freeze on commercial sales of the U.S. company’s 737 Max aircraft. Elsewhere, long-haul carrier Emirates announced at the Dubai Airshow that it would buy $52 billion of the Boeing planes, and SunExpress, a joint venture between Turkish Airlines and Lufthansa
said it would purchase 90 of the 737 Max jets.
Collective Audience Inc. shares
surged 4.9% after the digital-marketing company suffered a series of sharp declines in the wake of its blank-check company merger.
Jamie Chisholm contributed.