By Mark DeCambre and Steve Goldstein
U.S. stock indexes relinquished solid gains Monday and stocks ended mostly lower as persistent concerns about the spread of the delta variant of the coronavirus that causes COVID-19 created an excuse for modest selling in the first trading day for equity markets in August.
Investors also eyed progress on an infrastructure bill, merger activity and concerns about the pace and timing of the Fed’s plans to roll back easy-money policies.
How major stock indexes traded?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.09% fell 97.31 points, or 0.3%, to 34,838.16, after touching an intraday high at 35,192.11.
The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.75% traded down 8.10 points, or 0.2%, to 4,387.16, but had touched a Monday peak at 4,422.18.
The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.50% gained 8.39 points, or 0.06%, higher to close at 14,681.07, but had reached a intraday peak at 14,770.41.
Last week, the major indexes dropped, with the S&P 500 losing 0.4% and Nasdaq Composite dropping 1.1%, after the megacap tech companies reported quarterly results. The Dow fell 0.4% last week. The S&P 500 rose 2.3% in August, for its sixth consecutive monthly gain.
What drove the market?
Stocks saw choppy trade with the start of the action in August, a seasonally tough time for equities, living up to its billing.
“Some of the [turbulence] is being near all-time highs,” JJ Kinahan, chief market strategist at TD Ameritrade, told MarketWatch in a phone interview.
Concerns about the spread of the delta variant of COVID-19 caused some caution on Wall Street, with the 10-year benchmark Treasury BX:TMUBMUSD10Y at multimonth lows below 1.15%, casting a pall over markets. Those worries combined with increasing jitters about the outlook for economic and corporate growth are being parsed by investors.
Meanwhile, Fed Gov. Christopher Waller told CNBC in an interview Monday afternoon that the central bank should look to taper the Fed’s $120 billion a month in asset purchases early and that “we should go fast,” to give policy makers sufficient ammunition to raise rates in 2022 if they need to curb an overheated economy.
Waller’s remarks come after Fed Gov. Lael Brainard, in a speech delivered Friday night, indicated that she doesn’t think the central bank would be prepared announce a tapering of its bond purchase program at the Jackson Hole gathering at the end of the month. “I expect to be more confident in assessing the rate of progress once we have data in hand for September, when consumption, school, and work patterns should be settling into a post pandemic normal,” she said.
Initially, the markets had started the dog days of summer on a bullish note, supported by some confidence in the economic expansion and strength in corporate profits.
“Earnings season is largely over, and [with] the [Federal Open Market Committee] meeting and GDP behind us, markets enter a difficult seasonal period with few catalysts to drive markets higher,” wrote Mark Hackett, Nationwide’s chief of investment research.
“The bond market continues to reflect peak growth and a potential Fed policy error,” he noted.