- US stocks slipped as investors eyed the impact of rising inflation on corporate earnings.
- Investors will be watching Tuesday’s retail sales report from the Commerce Department.
- The yield on 10-year Treasury rose to 1.627% on Monday.
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US stocks slipped on Monday, with investors weighing the impact of inflation on future earnings and whether US companies can continue to handily exceed estimates as they had done in the third quarter.
Coming up, the market will be eyeing retail sales figures from the Commerce Department on Tuesday and earnings from big box retailers Target and Walmart as indicators of how consumers are feeling heading into the key holiday shopping season.
The benchmark S&P 500 on Monday climbed at the open, but ended lower. The tech-heavy Nasdaq Composite, dragged by electric vehicle maker Tesla, and the Dow Jones Industrial Average both slipped as well.
Equities also edged lower on Monday as Treasury yields climbed on expectations that the Federal Reserve may have to hike interest rates sooner than expected, Edward Moya, senior equity analyst at Oanda said.
Here’s where US indexes stood at the 4:00 p.m. ET on Monday:
- S&P 500: 4,682.80, down 0.01%
- Dow Jones Industrial Average: 36,087.45, down 0.04% (12.86 points)
- Nasdaq Composite: 15,853.85, down 0.04%
“Inflation will likely get the Fed hiking quickly but then they can stop after a few hikes and markets can calm down,” Moya added. “At some point, the Fed will have to tighten financial conditions and that has some investors hesitating remaining full tilt with stocks.”
Despite rising inflationary pressures exacerbated by global supply chain disruptions, corporate earnings for the third quarter have mostly outperformed Wall Street’s expectations.
And while the S&P 500 is on course to deliver double-digit returns in 2021, the benchmark is likely to pull back to 4,400 next year, a decline of around 6% as earnings growth moderates, according to Morgan Stanley. The bank’s analysts recommended that investors turn to European and Japanese equities.
Tesla fell as much as 5% after CEO Elon Musk threatened to sell more shares in a tweet response to Senator Bernie Sanders. Musk has already sold billions worth of Tesla stock since he asked his followers in a Twitter poll if he should sell 10% of his Tesla stake.
The yield on 10-year Treasury rose to 1.627% on Monday compared to Friday’s 1.583%. Bond yields and prices move in opposite directions.
In crypto, Gemini has added shiba inu coin to its platform following meme token’s stunning rally this year.
Solana is now the third crypto asset with a standalone price tracker monitored by the Bloomberg terminal, following bitcoin and ethereum.
Oil prices were mixed as investors weighed the possibility that Biden may authorize the release of strategic reserves.
Gold slipped by 0.14% to $1,862.76 per ounce.