Stocks mostly fell on Monday, giving back some of Friday’s gains as traders awaited new economic and earnings data this week to confirm or assuage concerns over supply chain challenges, inflation and the pace of the labor market’s recovery.
The S&P 500 edged down by about 0.1%. Last Friday, the first day of October and the fourth quarter, the blue-chip index logged its best start to the month since 2007 with a jump of 1.2%. Still, the index posted a weekly loss of 2.2%, or its worst since February, after an equity rout earlier in the week.
The Nasdaq underperformed against the other two major indexes, dropping 0.7% as Treasury yields climbed. The benchmark 10-year yield hovered just below 1.5%.
Stocks are struggling to regain footing after a September selloff, given that many of the concerns that sparked last month’s drop have persisted. In Congress, lawmakers have yet to come to an agreement on a solution to raise the debt limit and avert a potential government default, or an outcome that could come as soon mid-month and engender “a financial crisis and economic recession,” Treasury Secretary Janet Yellen warned last week.
Jitters over ongoing supply chain disruptions and fast-rising inflation have also been in focus, especially after Friday’s U.S. personal consumption expenditures (PCE) report reflected the fastest annual rise in inflation since 1991. And later this week, traders will receive the Labor Department’s monthly jobs report for September, which is expected to show an at least modest acceleration in job growth after a much weaker-than-expected August report. But after a strong string of economic data earlier this year, many pundits are bracing for decelerating growth and potential data disappointments into year-end.
“We are going to have to sort of tiptoe our way through some of the negative numbers that we will likely see, but I think the market will look across this valley,” Sam Stovall, U.S. equity strategist for CFRA Research, told Yahoo Finance Live on Friday.
And though only a handful of companies are reporting quarterly earnings results this week, the prints will help set the tone ahead of the formal start of third-quarter earnings season with the big banks next week.
As of Friday, consensus analysts on Wall Street projected earnings growth of just over 27% for the S&P 500 for the third quarter, according to FactSet. That would represent a marked slowdown from the second quarter’s 88% pace, but still come in as the third highest year-over-year growth rate since 2010 for the index.
“As equity valuations come under scrutiny amid the rapid rise in real rates, investor focus will increasingly assess whether earnings growth can continue to lead the market higher,” Goldman Sachs equity strategist David Kostin wrote in a note. He said the four key areas investors should be watching in the reports and management commentary this earnings season are on supply chains, oil, labor costs and growth in China.
“We expect upside to consensus estimates but believe the frequency and magnitude of EPS [earnings per share] beats will moderate from 1H 2021,” Kostin added.
10:00 a.m. ET: Factory orders topped estimates in August
Orders for U.S. manufactured goods increased more than expected in August, accelerating from July even as supply chain challenges weighed on the overall pace of growth in the goods-producing sector.
Factory orders were up 1.2% in August month-on-month, according to Commerce Department data on Monday. This came in faster than the 1.0% rise expected, according to Bloomberg consensus data, and represented a fourth consecutive monthly advance. Factory orders had risen by 0.7% in July, with this figure upwardly revised from the 0.4% previously reported.
The August increase came as orders rose for a wide range of manufactured products, including machinery, refrigeration equipment and heavy-duty trucks. Excluding transportation-related orders, factory orders were still up by 0.5% during the month, exceeding estimates for 0.4%.
9:30 a.m. ET: Stocks open slightly lower, Nasdaq underperforms
Here’s where markets were trading Monday morning:
S&P 500 (^GSPC): -11.68 (-0.27%) to 4,345.36
Dow (^DJI): -63.22 (-0.18%) to 34,263.24
Nasdaq (^IXIC): -69.34 (-0.48%) to 14,497.35
Crude (CL=F): +$1.23 (+1.62%) to $77.11 a barrel
Gold (GC=F): -$6.30 (-0.36%) to $1,752.10 per ounce
10-year Treasury (^TNX): +2.4 bps to yield 1.491%
9:07 a.m. ET: Qualcomm, SSW Partners announce plan to purchase automobile tech company Veoneer
The purchase will comprise an all-cash transaction of $37.00 per Veoneer share, giving the company an equity valuation of $4.5 billion. At the close of the deal, Qualcomm will receive Veoneer’s Arriver, or driver assistance software, business, while SSW Partners will acquire Veoneer’s outstanding capital stock.
Shares of Veoneer gained 4% following the announcement, while Qualcomm shares edged lower.
7:31 a.m. ET Monday: Stock futures point to a lower open
Here’s where markets were trading ahead of the opening bell Monday morning:
S&P 500 futures (ES=F): -20 points (-0.46%), to 4,323.75
Dow futures (YM=F): -123.00 points (-0.36%), to 34,044.00
Nasdaq futures (NQ=F): -90.50 points (-0.61%) to 14,671.25
Crude (CL=F): +$0.22 (+0.29%) to $76.10 a barrel
Gold (GC=F): -$7.90 (-0.45%) to $1,750.50 per ounce
10-year Treasury (^TNX): +2.9 bps to yield 1.496%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter