S&P 500 is flat on Monday as Wall Street takes a breather after its best week since June

The S&P 500 was little changed on Monday after it posted its biggest weekly gain in almost five months on the back of easing inflation data.

The stock market was divided to start the week. The broad-market index hovered around the flat line while the tech-heavy Nasdaq Composite slid 0.7%, and the Dow Jones Industrial Average rose 54 points, or 0.2%.

The S&P tech sector was down by about 1%, after posting its best week since April 2020 in the previous session.

“The market is trying to digest and even make sense of last week’s outsized equity market run in the face of Fed Governor Waller’s cautionary comments about the Fed still having a lot to do,” BMO Wealth Management Chief Investment Strategist Yung-Yu Ma. 

Related:  Stocks fall on Friday as rates jump following strong jobs report

“This week will have other Fed members comments and an array of economic data including retail sales, producer prices, industrial production, housing, and more – eventually we expect the market’s focus to turn away from the Fed and focus on the economic trajectory and this week may be a starting point for that,” he added.

The S&P 500 rallied 5.9% to finish the previous week, its best weekly advance since June. Investors cheered a lighter-than-expected inflation reading, betting that the Federal Reserve would soon slow its aggressive tightening campaign. The tech-heavy Nasdaq Composite gained 8.1% last week for its best week since March. The blue-chip Dow advanced 4.2%.

Related:  Stock futures are little changed after major averages suffer worst day since June

“A notable shift has occurred in the market, with investors increasingly risk-on across asset classes,” said Mark Hackett, Nationwide’s chief of investment research. “Technical indicators have improved dramatically, with investor sentiment, momentum, breadth, and risk factors all showing notable improvement.”

Still, the Federal Reserve has given little signal that it could deviate from its tightening path anytime soon. Fed Governor Christopher Waller said Sunday that, “We’re at a point we can start thinking maybe of going to a slower pace.” But, “we’re not softening. … Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there.”

Related:  Stock futures jump as traders try to build on Monday’s rally

The third-quarter earnings season is set to continue, with a heavy emphasis on retail. Big retailers Walmart, Home Depot, Target, Lowe’s, Macy’s and Kohl’s are all slated to post numbers this week.

Leave a Comment