NEW YORK — U.S. stocks ended Monday with mixed results, as global markets stabilized following a tumultuous week of sharp fluctuations.
The S&P 500 remained nearly flat, inching up by less than 0.01% after alternating between modest gains and losses throughout the day. The Dow Jones Industrial Average slipped by 140 points, or 0.4%, while the Nasdaq Composite saw a slight increase of 0.2%.
Markets in Europe and Asia also experienced relative calm, marking a significant shift from last week’s volatility. The previous week began with the worst day for Japanese stocks since the 1987 Black Monday crash, which was followed by the best day for U.S. stocks since 2022.
One of the key factors calming markets was the easing of the Japanese yen’s value on Monday. This came after the Bank of Japan’s recent interest rate hike had caused the yen to surge, forcing many hedge funds and investors to unwind a popular trade that involved borrowing yen at low rates to invest elsewhere. The abrupt sell-off had sent ripples through global markets.
A statement from a top Bank of Japan official last week, assuring that rates would not rise further as long as markets remain “unstable,” helped stabilize the situation. However, other concerns, particularly around a slowing U.S. economy, contributed to last week’s market turbulence.
Looking ahead, this week brings critical economic reports on inflation and consumer spending. Wall Street is hoping for data that shows a continued slowdown in inflation alongside robust retail sales. Such results would suggest that the Federal Reserve’s strategy of raising interest rates to curb inflation without triggering a recession is working.
However, recent weaker-than-expected economic data has raised concerns that the Fed may be pushing too hard on the brakes. Earlier this month, a report revealed that U.S. hiring had slowed more significantly than anticipated, fueling fears of a potential economic downturn.
Bank of America strategists, led by Ohsung Kwon, have cautioned that an unexpectedly high inflation reading could shock the markets, potentially triggering a major sell-off. The Fed faces a delicate balancing act: lowering rates could boost the economy but risk worsening inflation, while keeping rates high could curb inflation but hurt economic growth.
Despite these challenges, the U.S. economy continues to grow, and many economists believe a recession is unlikely. Nevertheless, concerns have weighed on Treasury yields, which fell again on Monday ahead of the upcoming data releases. The yield on the 10-year Treasury dropped to 3.90% from 3.94% on Friday, while the two-year Treasury yield, which is more sensitive to Fed actions, fell to 4.01% from 4.06%.
On Wall Street, most stocks declined, but a 4.1% surge in Nvidia’s shares helped counterbalance some of those losses. Nvidia’s performance is particularly influential due to its large market value, and the company has been a key player in the recent surge of interest in artificial intelligence technology.
Among other notable movers, KeyCorp jumped 9.1% after announcing a $2.8 billion investment from the Bank of Nova Scotia. The infusion of capital is expected to support further growth in KeyCorp’s investment banking and wealth management divisions.
Conversely, Hawaiian Electric saw its shares plummet by 14.5% after reporting weaker-than-expected results for the spring and expressing doubts about its ability to continue as a going concern without securing financing to cover $1.71 billion in liabilities related to the Maui windstorm and wildfire.
By the close of trading, the S&P 500 had edged up slightly by 0.23 points to 5,344.39. The Dow Jones fell by 140.53 points to 39,357.01, and the Nasdaq Composite gained 35.31 points to reach 16,780.61.
Looking ahead, investors will be closely watching earnings reports from major companies like Walmart and Home Depot later this week. While most large U.S. companies have posted better-than-expected profits for the spring, there is growing concern about how lower-income consumers are coping with economic pressures.
Source: Reuters