The S&P 500 and Nasdaq Composite were both headed for record closing highs on Monday, but things may get bumpier in the days ahead.
The S&P 500 was up 0.3%, even though only 190 stocks in the index were on track to close higher. It was benefitting from solid gains from large technology stocks. So was the Nasdaq Composite, which was up 0.9%.
On the flip side, the Dow was down 93 points, or 0.2%, with 18 of its 30 members set to close lower. The Dow lacks a handful of Magnificent Seven stocks, and the ones that are in the index don’t have as much pull as they would if the Dow weighted members by market value rather than stock price. The Roundhill Magnificent Seven ETF, which offers exposure to the seven, was down 1.6%.
Mizuho’s Daniel O’Regan writes that the session was “relatively quiet,” which isn’t surprising coming back from the abbreviated Thanksgiving holiday week.
“However, we are seeing some movement under the hood as large caps rebound and Semi’s rally at the expense of recent outperformers: It feels like themes that worked the first ~6-8 months of the year are regaining some momentum after a multi-week hiatus,” O’Regan writes. “However, volumes are so low it’s hard to confirm any of the moves.”
The yield on the 2-year Treasury note was also up to 4.2%, while the 10-year yield was up to 4.193%. Because yields are higher on the shorter-term note, the so-called yield curve is inverted once again.
The fact that most of the market is struggling today could suggest that traders are jittery ahead of a handful of key economic data releases this week, as well as commentary from Federal Reserve officials.
Wall Street is paying close attention to the labor market ahead of the Federal Reserve’s December meeting. Odds of another quarter-point rate cut are at 64.2%, according to the CME FedWatch Tool, but things could shift based on Friday’s jobs report. A “too hot” number may push back rate cut expectations.
