US stocks ended the day mixed on Monday, with the S&P 500 finishing almost unchanged, the Dow Jones Industrial Average slipping, and the Nasdaq composite rising slightly. Markets around the world seemed to stabilize after a tumultuous week of extreme swings, including the worst day for Japanese stocks since 1987 and the best day for US stocks since 2022. The Japanese yen eased following a sharp rise triggered by a Bank of Japan interest rate hike, which forced many investors to abandon popular trades involving borrowing yen at low rates. This led to widespread selling across global markets.
A calmer atmosphere at the start of the week on Wall Street was noted by AP business correspondent Seth Sutel. A promise from a top Bank of Japan official to not raise rates further as long as markets remain unstable helped ease some concerns. However, worries about a slowing US economy also contributed to last week’s market turbulence. This week will bring reports on inflation and US retail sales, with the best-case scenario being a continued slowdown in inflation combined with strong retail sales, indicating that the Federal Reserve’s efforts to balance economic growth with inflation control are working.
Economic data showing a slowdown in hiring and concerns about stagflation – a combination of weakening economic growth and worsening inflation – have raised worries about the Fed’s next steps. A hotter-than-expected inflation reading could trigger a major downside event for the market, according to strategists at Bank of America. With no easy fixes available, concerns about a recession have led to downward pressure on Treasury yields. The bond market saw yields fall ahead of upcoming data reports, with the 10-year Treasury yield slipping to 3.90% and the two-year yield dropping to 4.01%.
On Wall Street, most stocks weakened, with losses offset by a 4.1% jump in Nvidia’s stock. Big Tech companies, including Nvidia, have been shaky recently amid concerns about overvaluation. KeyCorp saw a 9.1% jump following a $2.8 billion investment from the Bank of Nova Scotia, while Hawaiian Electric reported weaker-than-expected results, leading to a 14.5% drop in its stock. Overall, the S&P 500 rose slightly, the Dow dropped, and the Nasdaq composite gained.
Upcoming earnings reports from major companies like Walmart and Home Depot will provide further insight into the health of the US economy. Most large companies have been reporting better-than-expected profits, but pressure remains on retailers, especially those catering to lower-income consumers. Overall, the market remains cautious amid ongoing concerns about economic growth, inflation, and the Federal Reserve’s next moves.
