U.S. stocks retreated Monday, but finished above session lows, as investors scaled back expectations for interest-rate cuts following last week’s strong June jobs report.
What are major indexes doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.24% fell 115.98 points, or 0.4%, to close at 26,806.14, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +2.28% declined 14.47 points, or 0.5%, to finish at 2,975.95. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +1.72% declined 63.41 points, or 0.8%, to end at 8,098.38.
At session lows, the Dow had lost 177.25 points, or roughly 0.7%, the S&P retreated 20.29 points, also 0.7%, while the Nasdaq traded as many as 83.4 points lower, a loss of 1%.
Stocks scored weekly gains in last week’s holiday-shortened action, with all three major indexes notching record closes on Wednesday. But stocks pulled back Friday to end slightly lower after a bigger-than-expected jump in June nonfarm payrolls saw traders scale back expectations for rate reductions.
What drove the market?
Traders continue to look for the Federal Reserve to cut rates when policy makers meet at the end of the month, but fed-funds futures show investors cut bets for a 50 basis point reduction since Friday morning. Analysts said testimony before Congress by Fed Chairman Jerome Powell will likely be a big driver for stocks this week.
“Our economists continue to expect a rate cut by the U.S. Federal Reserve at the end of July, but all eyes will now be on Fed Chairman Jerome Powell on Wednesday,” said Patrik Lang, head of equity research at Julius Baer, in a note.
“With regard to equities, any macroeconomic data that eases concerns about an impending slowdown, in combination with a Fed that is not tightening and a steepening yield curve, are, in our view, providing a bullish backdrop for equities in general, especially for cyclicals,” he said.
European equities /zigman2/quotes/210599654/delayed XX:SXXP +0.42% traded slightly lower as shares of German banking giant Deutsche /zigman2/quotes/205584254/delayed DE:DBK -0.16% /zigman2/quotes/207242873/delayed XE:DBK -1.68% slumped more than 5% in Frankfurt, a day after announcing a sweeping restructuring that will see it shed 18,000 jobs by 2022 and drop its stock sales and trading unit as it exits investment banking activities.
Which stocks were in focus?
Shares of Dow component Boeing Co . /zigman2/quotes/208579720/composite BA -5.68% fell 1.3% Monday, after a Saudi Arabian airline canceled a deal valued at more than $5.5 billion, deciding to give its business to rival Airbus SE. The loss comes amid questions regarding the safety of the 737 Max, after two fatal crashes since October.
Shares of Google-parent Alphabet Inc . /zigman2/quotes/205453964/composite GOOG +1.38% /zigman2/quotes/202490156/composite GOOGL +1.35% were in focus after the New York Post reported that Alphabet director Alan Mulally was in discussions with satellite-TV provider Dish Network Corp . /zigman2/quotes/207505872/composite DISH +1.39% to create a fourth U.S. telecom player, if a planned merger between T-Mobile US Inc . /zigman2/quotes/204659678/composite TMUS -0.85% and Sprint Corp . is consummated. The network would be formed by acquiring assets from T-Mobile, which it may be forced to sell if the Justice Department approves the merger. Alphabet denied the report. Alphabet shares declined 1.4%.
Symantec Corp . stock rose 2.4% after Bloomberg reported that former Chief Executive Officer Greg Clark has teamed up with private-equity firms Advent International and Permira Holdings to attempt to make a counter offer to Broadcom’s reported takeover attempt. Broadcom Inc. /zigman2/quotes/200646538/composite AVGO +6.01% is still seen as the favorite in the race for Symantec’s assets.
Canada-based cannabis firm CannTrust Holdings Inc . said that its greenhouse facility in Pelham, Ontario was deemed “noncompliant” by regulators. U.S.-listed shares fell 22.5% Monday.
How did other markets trade?
The yield on the 10-year U.S. Treasury note edged slightly higher to 2.048%.
In Asia, stocks fell sharply Monday, with China’s Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.42% , Shenzhen Composite index /zigman2/quotes/210598015/delayed CN:399106 -0.09% and CSI 300 /zigman2/quotes/210292273/delayed KR:000300 -0.66% all retreating more than 2.3%.