U.S. equities were flat on Monday, as U.S. Treasury yields reversed and climbed higher and investors awaited quarterly reports from big retailers later in the week.
The Dow Jones Industrial Average added 40 points, or 0.1%. The S&P 500 hovered near the flat line, while the tech-heavy Nasdaq lost 0.4%.
Investors were focused on upcoming quarterly earnings reports from several major retailers this week, including Walmart and Home Depot, which will release results on Tuesday, and Target and Lowe’s, which will report on Wednesday.
Markets continued to digest a range of economic news last week showing inflation is rising even more than expected and workers have continued to quit their jobs in search of better opportunities.
That data “added to concerns that inflation at a 30-year high could indeed remain a stickier problem and challenge for businesses, consumers and monetary policy makers to contend with over the next four to six months or even longer” John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said in a note Monday.
Rather than looking to yields’ short-term movements as indicators of the strength of the economy, equities investors are now looking to them “to try to get an idea as to what normalized interest rates are, and what a sustainable, new normal would be – not just for the S&P but for growth stocks as well,” David Bianco, chief investment officer for the Americas at DWS Group, told CNBC.
Tesla shares fell 4% Monday following a weekend Twitter exchange between CEO Elon Musk and Sen. Bernie Sanders, in which Musk suggested he’d be willing to sell even more of his shares. Musk sold nearly $7 billion worth of Tesla stock last week.
However, shares of Nasdaq member Dollar Tree jumped 13% following a report Friday that activist investor Mantle Ridge has taken a stake worth at least $1.8 billion in the discount store chain and will push it to do more to add to shareholder value.
Dow component Boeing rose nearly 5% following news that Saudi Arabian Airlines is in talks with Airbus and Boeing for a wide-body jet order. At the same time, Emirates announced an order for two Boeing 777 Freighters at the 2021 Dubai Airshow.
Stocks are coming off a losing week after last month’s consumer price index made its largest annual increase in more than three decades. The major averages snapped a five-week winning streak.
Also, the Labor Department reported that a record 4.4 million workers left their jobs in September, generally a sign they can get something better. Consumer confidence, though, dipped to a 10-year low in November, as consumers apparently flush with cash are growing more worried about inflation.
October’s CPI jumped 6.2% from a year ago, well above the 5.9% estimate from economists polled by Dow Jones. The index, which tracks a basket of consumer products, increased 0.9% on a month-over-month basis, also hotter than expected.
Investors this week will get a look at how much consumers are spending when retail sales data drops Tuesday, while housing numbers come Wednesday with new construction starts and building permits. This also will be a busy week for the Federal Reserve, with multiple officials scheduled to speak through the week.
The major averages are not far from their record highs. The Dow is 1.2% off its all-time high. The S&P 500 and Nasdaq sit 0.8% and 1.5%, respectively, away from their records.
