Wall Street traders refrained from making big moves at the start of a busy week for corporate earnings, with the stock market still on pace to notch its longest streak of monthly gains since August 2021.
(Bloomberg) — Wall Street traders refrained from making big moves at the start of a busy week for corporate earnings, with the stock market still on pace to notch its longest streak of monthly gains since August 2021.
Investors have looked past concern about an earnings recession as data bolstered hopes on a soft landing despite the Federal Reserve’s rate hikes. Still, valuation worries have resurfaced, with the market trading near overbought levels. While many investors are betting the great tech rally that drove this year’s advance has staying power, there’s a growing view the sector is due for a breather — which could weigh on the broader market.
To Matt Maley at Miller Tabak + Co., investors need to be careful about extrapolating what we’ve seen this year in stocks. While the rally could last longer, it’s important for traders to have a plan in place should “some compelling cracks” start to form, he said. Maley is betting broad averages will see limited upside over the next couple of months.
“Is merely ‘avoiding a recession’ really enough to push the stock market a lot higher from its expensive level? said Maley. “Investors need to be careful about trying to squeeze every last penny out of this rally in the stock market over the coming days and weeks given that many of the best stocks are quite expensive.”
The S&P 500 was little changed Monday, while still on pace for its fifth consecutive monthly advance. The benchmark has risen about 3% in July. The megacap space also saw subdued action, with Apple Inc. and Amazon.com Inc. due to report earnings in the coming days. The Nasdaq 100 headed toward its longest streak of monthly gains since August 2020. Treasury 10-year yields hovered near 3.95% while the dollar was little changed.
Read: Wall Street’s Biggest Bear Mike Wilson Changes Tune on the Rally
In corporate news, SoFi Technologies Inc. gained after the online bank raised its revenue guidance, citing benefits from deposit growth and lower funding costs on loans. Palantir Technologies Inc. climbed on growing optimism over the software firm’s exposure to artificial intelligence. Johnson & Johnson fell as a judge dismissed the company’s second attempt at using a unit’s bankruptcy case to press thousands of cancer victims to drop their lawsuits and accept an $8.9 billion settlement.
Traders also waded through the latest remarks from central bank officials.
Fed Bank of Chicago President Austan Goolsbee said Monday that data showing slower inflation is “fabulous news,” but he hasn’t yet decided on whether to support pausing rate hikes at the next policy meeting. Over the weekend, his Minneapolis counterpart Neel Kashkari said the inflation outlook is “quite positive,” though the central bank’s aggressive monetary tightening campaign will likely result in some job losses and slower growth.
Elsewhere, the yen dropped after the Bank of Japan announced unscheduled bond-purchase operations to buy debt. The BOJ was seeking to contain a selloff after it said Friday it will allow yields to rise above a 0.5% cap.
Key events this week:
- Reserve Bank of Australia policy decision, Tuesday
- Eurozone S&P Global Eurozone Manufacturing PMI, unemployment, Tuesday
- US construction spending, ISM Manufacturing, job openings, light vehicle sales, Tuesday
- China Caixin Services PMI, Thursday
- Eurozone S&P Global Eurozone Services PMI, PPI, Thursday
- Bank of England rate decision, Thursday
- US initial jobless claims, productivity, factory orders, ISM Services, Thursday
- Eurozone retail sales, Friday
- US unemployment rate, non-farm payrolls, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.1% as of 11:08 a.m. New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.3%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1020
- The British pound was little changed at $1.2860
- The Japanese yen fell 0.6% to 142.06 per dollar
Cryptocurrencies
- Bitcoin rose 0.1% to $29,313.41
- Ether fell 0.3% to $1,860.1
Bonds
- The yield on 10-year Treasuries was little changed at 3.95%
- Germany’s 10-year yield was little changed at 2.48%
- Britain’s 10-year yield declined two basis points to 4.31%
Commodities
- West Texas Intermediate crude rose 0.6% to $81.09 a barrel
- Gold futures rose 0.4% to $2,006.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Richard Henderson, John Viljoen, Vildana Hajric and Isabelle Lee.
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