U.S. stock indexes were trading slightly lower early Monday after the S&P 500 established its first record since November, following the release of data showing the core measure of consumer prices receding but around its highest level in about 40 years.
Worries about monetary policy and omicron were hemming in bullish investments to start the week.
What’s happening
- The Dow Jones Industrial Average DJIA, -0.75% retreated 207 points, or 0.6%, to 35,764.
- The S&P 500 SPX, -0.49% fell 0.2%, or 16 points, to 4,693.
- The Nasdaq Composite Index COMP, -0.32% was trading less 0.2%, or 30 points, lower at 15,598.
Last week, each of the major indexes rose 4%, with the S&P 500 closing at its 67th record high of 2021 on Friday. The benchmark U.S. index has gained 25% this year.
What’s driving markets
Markets are showing some softness to start the week, with all eyes on the Federal Reserve’s final gathering of 2021 set for later this week. Investors, however, had been in the buying mood despite an inflation reading that, at least on some measures, helped to highlight, rising pricing pressures in America, even if the core reading of inflation was showing some signs of receding.
The headline figure from Friday’s inflation report showed that the main index reached a 39-year high on a year-over-year basis, but there was relief that monthly momentum softened.
Investors are anticipating that the Federal Reserve on Wednesday will announce a faster pace of tapering in response to rising prices.
“The expectation for this week’s FOMC meeting is the announcement of a faster QE tapering, and perhaps a hint that the first rate hike in the U.S. could come earlier than previously thought,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
“We may see some categories of stocks fall from grace, such as meme stocks which were greatly benefiting from cheap liquidity, and which may not fly as high with their own wings in the coming months,” the Swissquote analyst added.
Besides the week’s flurry of central bank decisions, which also will include the Bank of England, the European Central Bank and the Bank of Japan, markets also will be focused on coronavirus headlines.
On Sunday night, U.K. Prime Minister Boris Johnson warned of a “tidal wave” of omicron infections and said England would quicken the pace of booster vaccinations.
Which companies are in focus
- Shares of Tesla TSLA, -3.92% were down 2.2% even after the electric-vehicle maker’s CEO Elon Musk was named Time Magazine person of the year.
- Pfizer Inc. PFE said Monday it has agreed to acquire Arena Pharmaceuticals Inc. ARNA in a deal with a value of about $6.7 billion.
- Daimler Truck DTG surged 11% on Monday, its second day of trade following the spinoff from Daimler DAI.
- Navient Corp. NAVI said Monday its board has approved a new $1 billion share buyback authorization.
- Mattress company Tempur Sealy International Inc. TPX said Monday it has increased its share buyback authorization to $1.5 billion.
- Eli Lilly & Co. LLY said Monday it has entered a strategic collaboration with Foghorn Therapeutics Inc. FHTX for novel oncology targets using Foghorn’s proprietary gene traffic control platform, a move that sent Foghorn’s shares up 26% in premarket trading.
How other assets are trading
- The Turkish lira USDTRY, -0.81% crashed against the dollar, as S&P warned it may downgrade Turkey’s debt rating. The Central Bank of Turkey responded by intervening in markets “due to unhealthy price formations in exchange rates.”
