Stocks pare gains after Dow hits intraday record

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MARKET SNAPSHOT

U.S. stock benchmarks remained mostly higher Monday, driving the blue-chip Dow Jones Industrial Average to an intraday record, as investors bought energy, materials and financial shares on apparent optimism for the outlook for the economy.

What’s happening

  • The Dow Jones Industrial Average was up 33 points, or 0.1%, at 36,361, after carving out an all-time intraday high at 36,565.73.
  • The S&P 500 index gave up an early gain to edge down 0.1% to 4,695, threatening to snap a seven-session winning streak.
  • The Nasdaq Composite Index held on to a gain of 4 points, or less than 0.1%, at 15,975. The tech-heavy index was aiming for an 11th straight session gain, which would mark its longest win streak since Dec. 26 of 2019.
  • The small-capitalization Russell 2000 index was trading 0.7% higher at 2,454.

Last week, the Dow, the S&P 500 and the Nasdaq Composite each ended at record highs. The S&P 500 has climbed for six of the last seven weeks and 16 of the last 18 trading sessions.

What’s driving market?

Stock indexes initially built on gains scored after the employment report Friday showed job growth rebounded in October, and healthy quarterly results have helped to support the market’s persistent advance, despite some lingering concerns about inflation and the Federal Reserve’s policy shifts.

“The stock market kicked off November the way it wrapped up October — with bulls in charge,” wrote Chris Larkin, managing director trading E-Trade Financial, in a note.

“Boosted by a vote of confidence from the Fed, the S&P hit new record highs each day to log its strongest week since June and sent small-caps higher,” Larkin said. 

Market strategists credit the market’s buoyancy is a seasonal trend of buying, the November period starts a bullish stretch for equities, and company stock repurchases.

“Driving the momentum is aggressive retail investor activity, accelerating stock repurchases and strong seasonality,” wrote Mark Hackett, Nationwide’s chief of investment research.

“As earnings season winds down, investor attention will focus on a fresh set of catalysts, including the passage of fiscal spending deals, accelerating economic activity and improved investor sentiment,” he wrote.

Meanwhile, St. Louis Fed President James Bullard told Fox Business that he foresees the central bank raising interest rates twice next year, and that a more rapid pace of interest-rate increases could be adopted if inflation runs hotter than expected.

“If inflation is more persistent, we may have to take action a little sooner,” he told the business network. “We have done a lot to move policy in a more hawkish direction,” the policy maker said. Bullard will be a voting member of the Fed next year.

Also on Monday, Fed Vice Chair Richard Clarida repeated his view that the criteria for a rate increase could be met before the end of 2022.

Read: ‘It’s a melt-up’: U.S. stocks are on an unusually strong run heading into the holidays

The Fed officials’ comments come after Friday’s employment report showed the U.S. economy added 531,000 jobs in October, more than the 450,000 jobs that economists surveyed by The Wall Street Journal had expected to see.

It also came after the Fed announced on Wednesday that it will begin to wind down its bond-buying program, as expected, which was designed to prop up the economy during the pandemic.

The Fed however, indicated that the factors boosting inflation are expected to be transitory. Investors also are closely watching for signs about the reappointment of Powell, whose term as Fed boss expires in 2022, following reports that President Joe Biden met with the chairman and Fed Gov. Lael Brainard at the White House on Thursday.

Meanwhile, the House of Representatives approved an infrastructure package, though a larger spending bill remains in doubt. Biden is expected to sign the bill, which includes $110 billion in funding for roads, bridges and major projects.

In corporate news, Elon Musk’s Twitter poll came out in favor of him selling 10% of his stake in Tesla sending the electric vehicle auto maker’s stock down nearly 5% in early action.

Need to Know: What makes Tesla worth $1,400 a share? Here’s why Jefferies has the highest price target on Wall Street.

Musk, in a tweet, said he was prepared to accept either outcome. Musk has repeatedly questioned the value of Tesla, and his brother Kimbal sold 88,500 shares on Friday, according to a Securities and Exchange Commission filing.

Which companies are in focus?

  • PayPal is set to report its third-quarter results after the close of trade. Its shares were up 2%.
  • Elsewhere, Japanese investment group SoftBank JP:9984 reported a record loss due to its Chinese holdings as it disclosed it no longer had positions in companies including Amazon.com Inc. AMZN, Taiwan Semiconductor TSM and PayPal. Shares of SoftBank in Tokyo closed down 0.8%.

How are other assets faring?

  • The 10-year Treasury note yields 1.48%, down 3 basis points.
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.3%.
  • Oil futures rose, with the U.S. benchmark CL00 CLZ22 climbing 0.6% to $81.77 a barrel. Gold futures GC00 rose 0.4% to around $1,823.90 an ounce.
  • The Stoxx Europe 600 SXXP advanced less than 0.1% to add to its record high. London’s FTSE 100 UKX ended 0.1% lower.
  • The Shanghai Composite SHCOMP rose 0.2%. The Hang Seng Index HSI closed 0.4% lower. Japan’s Nikkei 225 NIK declined 0.4% Monday.
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