Stocks moved lower on Monday, extending the recent downtrend. For the most part, assets continue to reprice in accordance with rising interest rates. Notably, 10-year treasuries are yielding about 2.9%, up 1.4 percentage points since the start of the year. (Traditionally, equities tend to lose favor with investors as interest rates on fixed-income offerings rise.) In addition to the ramp-up in borrowing costs, high inflation, and supply-chain issues, Covid-19 lockdowns in China also continue to weigh on traders’ minds. As a result, the Dow Jones has posted seven straight down weeks (the most since 2001), while the S&P 500 has lost ground for six consecutive weeks (the most since 2011), and the NASDAQ is deep into bear market territory, having shed about 28% since peaking last November.
The Dow Jones Industrial Average managed to close in positive territory, gaining 26 points yesterday. A slight majority of advancers allowed the blue chip index to buck the trend, including Chevron (CVX) up 3.1%, Merck (MRK) up 2.1%, and Verizon (VZ) up 1.8%. The S&P 500 lost 15 points. Meanwhile, the tech-laden NASDAQ fared the worst of the lot, with a loss of 142 points, or 1.2%. Most of the major market sectors ended the day in negative territory, with the largest losses coming from consumer discretionary (-2.1%) and technology (-.9%) issues. On the other side of the ledger, energy shares closed up 2.6%, while healthcare stocks gained .7%. The price of West Texas Intermediate rose 3.4%, to about $114.20 a barrel.
U.S. stock futures are suggesting a strong start at today’s opening bell. Elsewhere, Asian markets were up overnight, while stocks in Europe are also firmly in the green. Meanwhile, oil futures are up slightly, to around $114.25 a barrel.
On the economic front, this morning’s report on retail sales from the Commerce Department indicated an uptick from March, with growth of 0.9% in April. Later today, we get the NAHB home builders’ index for May, where a slight decline is expected. Tomorrow brings April’s figures for building permits and housing starts, with modest declines expected for both counts. On Thursday, in addition to the latest initial and continuing jobless claims numbers, we also hear the latest count of existing home sales, with a modest drop anticipated for April.
– Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
