The stock market experienced a quiet Monday as U.S. stocks finished mixed, following a week of extreme swings in markets around the world. The S&P 500 saw minimal change, edging up by less than 0.01%, while the Dow Jones Industrial Average slipped 140 points, or 0.4%, and the Nasdaq composite rose 0.2%. This stability was a stark contrast to the previous week, which saw Japanese stocks experiencing their worst day since the Black Monday crash of 1987, followed by the best day for U.S. stocks since 2022.
The calm in the markets can be attributed to the easing of the Japanese yen, which had surged earlier, causing shockwaves in the market. The Bank of Japan’s decision not to raise rates further as long as markets remain unstable also helped soothe investors‘ nerves. However, concerns about a slowing U.S. economy and other worries were still lingering, contributing to last week’s market turbulence.
This upcoming week will bring reports on inflation and U.S. retail sales, which will be closely watched by investors. The ideal scenario for Wall Street would be data showing a continued slowdown in inflation coupled with strong retail sales, indicating that the Federal Reserve is successfully managing the economy to curb inflation without causing a recession.
Recent economic data showing a weakening U.S. economy has raised concerns that the Fed may be leaning too heavily on one side of the tightrope it’s walking. A hotter-than-expected inflation reading could lead to a major downside event for the market, while a cooler-than-expected figure would be more welcomed by investors.
The uncertainty in the market has also impacted Treasury yields, with the 10-year Treasury yield slipping to 3.90% and the two-year Treasury yield falling to 4.01%. Despite the majority of stocks weakening on Wall Street, a 4.1% jump for Nvidia helped offset some losses. Big Tech companies have been shaky recently, with concerns about overvaluation affecting their stock prices.
In terms of individual companies, KeyCorp saw a 9.1% jump after announcing a significant investment from the Bank of Nova Scotia. On the other hand, Hawaiian Electric reported weaker results for the spring, causing its stock to plummet by 14.5%. Overall, the S&P 500 rose slightly, the Dow dropped, and the Nasdaq composite gained.
Looking ahead, several major companies, including Walmart and Home Depot, will be reporting their latest earnings results. While most big U.S. companies have been exceeding profit expectations, there is pressure on retailers, especially concerning lower-income spenders.
In conclusion, the market’s stability on Monday provided a brief respite after a tumultuous week. Investors will be closely monitoring upcoming economic data and earnings reports to gauge the health of the economy and the direction of the market.