Dow pulls back from record territory, but technology-laden Nasdaq edges higher

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© Angela Weiss/Agence France-Presse/Getty Images

MARKET SNAPSHOT

© Angela Weiss/Agence France-Presse/Getty Images

The Dow traded modestly lower Monday, after briefly surpassing its all-time closing high, while the Nasdaq Composite was trading with modest gains as investors searched for reasons to keep propelling equities higher amid the next leg of the economic recovery.

What are major indexes doing?

  • The Dow Jones Industrial Average was down 165 points, or 0.5%, at around 34,591, after rising above its May 7 all-time closing high at 34,777.76.
  • The S&P 500 index was trading near 4,217, down 0.3%, but not far off its record closing high at 4,232.60, also put in on May 7.
  • The Nasdaq Composite Index rose about 20 points, or 0.1%, to 13,835.

Losses on the S&P 500 were being led by a 1.4% decline in materials shares and a 0.5% fall in those for financials

On Friday, stocks rose following a May jobs report that came in below expectations but showed a significant pickup in job creation from April. The Dow rose 0.7% for the week, while the S&P 500 gained 0.6% and the Nasdaq Composite advanced 0.5%.

What’s driving the market?

Markets were drifting mostly lower amid lackluster trade, as investors looked forward to the release of May inflation data on Thursday to help gauge pricing pressures building up during the most recent leg of the U.S. economic recovery.

“You’ve got a handful of stocks going berserk, but the rest of the market has been seeing a very slow grind higher,” said Sahak Manuelian, head of equity trading at Wedbush Securities, adding that the summer doldrums appear to be setting in after Friday’s rally.

Shares of AMC Entertainment Holdings Inc. were rocketing 20% higher Monday, while those of GameStop Corp. were up about12%.

Read: AMC Takes Off Again on Another Meme Mania Monday

“In some areas, we are seeing the reflation trade stocks are giving back a little bit,” he told MarketWatch, pointing Monday’s pullback in shares in the materials and industrials sectors.

Investors have been grappling with concerns about the potential for out-of-control inflation, while also weighing the prospects of a major infrastructure plan that may further stimulate economic growth in the rebound from COVID.

Treasury Secretary Janet Yellen said in an interview Sunday that it would be OK if President Joe Biden’s $4 trillion spending plans lift inflation and lead to higher rates.

“We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade,” she told Bloomberg. “We want them to go back to” a normal environment, “and if this helps a little bit to alleviate things then that’s not a bad thing — that’s a good thing.”

Investors also have been focused on signs of a slower pace of recovery for the U.S. labor market, after May’s employment report fell short of some Wall Street estimates, even as employers across the economy report difficulties attracting workers to fill vacant spots.

“Economic data have been erratic, and we expect more of the same as economies restart amid pent-up consumer demand and supply shortages,” wrote a team led by Elga Bartsch, head of macro research at the BlackRock Investment Institute, in a Monday note.

“We advocate looking through near-term market volatility and remain pro-risk, predicated on our belief that the Fed faces a very high bar to change its easy monetary policy stance.”

Read: Taper tantrum? Only if somebody wakes the U.S. bond market

On Thursday, the May consumer-price index is scheduled for release, which will offer the latest picture on pricing pressures. A jump in the April reading last month rattled investors last month.

Economic Preview: U.S. inflation is still climbing and now higher labor costs are adding to the pressure

Meanwhile, the Group of Seven wealthy democracies agreed Saturday to support a global minimum corporate tax of at least 15%, a move designed to deter multinational companies from avoiding taxes by stashing profit in low-rate countries. The plan must overcome hurdles to implementation, however, including a divided U.S. Congress.

Biden and Sen. Shelley Moore Capito, R-W.Va., were set to meet again Monday in an attempt to reach a bipartisan agreement on infrastructure spending. Biden on Friday rejected an offer by Capito to add around $50 billion to Senate Republicans’ $928 billion plan. Biden, who last week cut the size of his infrastructure proposal to $1.7 trillion, told the lawmaker he wants at least $1 trillion in new spending over current levels versus $250 billion in the Republican plan, according to reports.

The economic calendar is light Monday, with April consumer-credit data due at 3 p.m. Eastern.

Which companies are in focus?

  • Biogen Inc. shares were up 0.1% after the Food and Drug Administration approved its Alzheimer’s drug.
  • Shares of Amazon.com Inc. were 0.7% lower after founder Jeff Bezos said he would be one of the first passengers on his Blue Origin space-travel company’s New Shepard spacecraft.
  • Tesla Inc. will pull the plug on its Model S Plaid Plus electric car, Chief Executive Elon Musk said Sunday, because the regular Plaid is “so good.” Tesla shares were down 2%.
  • A group of private-equity firms reached a deal to acquire Medline Industries Inc. that would value the medical-supply company at more than $30 billion, in one of the largest leveraged buyouts since the financial crisis. Medline said Saturday that Blackstone Group Inc. Carlyle Group Inc. and Hellman & Friedman LLC had reached a deal to take a majority stake in the company.
  • Apple Inc.’s annual Worldwide Developers Conference, or WWDC, begins Monday as Apple awaits a ruling on a lawsuit brought by Epic Games, the maker of the popular “Fortnite” game. Shares of Apple were off 0.5%.

How are other assets faring?

  • The yield on the 10-year U.S. Treasury note TMUBMUSD10Y was up 1 basis point at 1.57%, compared with 1.56% on Friday at 3 p.m. Eastern Time.
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.2%.
  • Oil futures CL00 traded slightly lower, with West Texas Intermediate crude for July delivery off 28 cents, or 0.4%, at $69.33 a barrel. Gold futures GC00 for August delivery climbed by $6.40, or 0.3%, to $1,898.50 an ounce.
  • In European equities trading, the pan-Continental Stoxx Europe 600 SXXP rose 0.2% to close at a record high of 453.56. London’s FTSE 100 UKX rose 0.1%.
  • In Asia, the Shanghai Composite added 0.2%, while the Hang Seng Index slipped 0.5%; Japan’s Nikkei 225 rose 0.3%.

William Watts contributed reporting

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