U.S. stocks were trading lower Monday, despite Friday’s stellar jobs report that ignited bullish sentiment on Wall Street, as investors brace for a wave of global central bank policy updates, fresh developments on the U.S.-China trade front and a key tariff deadline set for Sunday.
How are major benchmarks performing?
The Dow Jones Industrial Average DJIA, -0.24% retreated 69 points, or 0.2%, at 27,947, while the S&P 500 index SPX, -0.19% lost nearly 4 points to trade at 3,142 and the Nasdaq Composite Index COMP, -0.23% shed 10 points, or 0.1%, at 8,645.
That put the Dow about 0.8% off its 28,164.00 record closing high, the S&P 500 almost 0.4% away from its 3,153.63 peak close and the Nasdaq about 0.1% from its all-time closing high of 8,646.70, each set on Nov. 27, according to Dow Jones Market Data.
On Friday, the Dow rose 337.27 points, or 1.2%, at 28,015.06, while the S&P 500 gained 28.48 points, or 0.9%, to 3,145.91, and Nasdaq Composite Index advanced 85.83 points to 8,656.53, a gain of 1%.
For the week, the Dow and Nasdaq lost 0.1%, while the S&P 500 gained 0.2%.
What’s driving the market?
Monetary policy will come into focus this week, with the Federal Reserve set to commence its gathering on Tuesday and the European Central Bank, headed by new President Christine Lagarde, scheduled to hold its convention on Thursday, with investors hoping to garner clues on the state of the global economy and the longer-term outlook for interest rates.
Meanwhile, investors continue to assess the state of tariff talks ahead of the Dec. 15 deadline for 15% import duties on $156 billion of annual consumer imports set to take effect. Some experts, however, have speculated that the President Donald Trump may delay implementing tariffs as the parties work toward a lasting detente.
See: The runway until more China tariffs kick in is getting short. Expect a bumpy ride
“There is a lot of uncertainty heading into Dec. 15 about what the president is going to do,” said Robert Pavlik, Chief Market Strategist at SlateStone Wealth LLC, in an interview with MarketWatch. But he also pointed out that “people are not running for the hills,” since leading sectors on Monday were Consumer Discretionary, Real Estate and Consumer Staples.
“If you saw all of the more defensive areas of market that were leading today, that would give you a different message that people are worried and moving to the sidelines,” Pavlik said.
On Friday, anxious stock-market investors shook off tariff concerns to focus on the strength of the U.S. labor market. The U.S. economy created 266,000 new jobs in November, the Labor Department reported, marking the biggest gain since January, signaling job growth remains robust even though economic growth has slowed.
“It was all about the US employment data on Friday, which easily beat forecasts,” wrote Marios Hadjikyriacos, investment analyst at XM in a Monday note. “The icing on the cake was the [University of Michigan] consumer sentiment index for December, which unexpectedly jumped to its highest since May, extinguishing concerns that a recession may be on the horizon.”
“The blockbuster numbers cemented expectations that the Fed will reaffirm its neutral stance at Wednesday’s policy meeting, propelling the dollar higher alongside Treasury yields and US stocks,” he added.
Economic reports out of China indicate that trade tensions have hurt the world’s second-largest economy, as China’s exports unexpectedly dropped 1.1% in November from a year earlier, while shipments to the U.S. fell 23%, data from the General Administration of Customs showed over the weekend.
China’s commerce ministry on Monday said Beijing hopes trade negotiations with the U.S. will result in a “satisfactory” outcome soon, according to reports.
Which stocks are in focus?
Tesla Inc. TSLA, +2.06% gained 1.3% even as reports indicated that a Tesla Model 3 on autopilot crashed into two vehicles — one of them belonging to the Connecticut State Police.
Shares of Chevron Corp. CVX, -0.53% fell 0.4% early Monday after Citi analyst Alastair Syme downgraded the stock to neutral from buy.
Shares of Merck & Co. Inc. MRK, +0.03% were in focus after the pharmaceutical company said it would buy ArQule Inc. ARQL, +103.78% in a deal worth $2.7 billion. Merck shares were down 0.3%, while ArQule’s stock rallied 103.4%.
UnitedHealth Group Inc. UNH, -0.39% subsidiary OptumRx’s is acquiring Diplomat Pharmacy Inc. DPLO, -32.44% for $4 per share, the companies said Monday, well below Friday’s closing price of $5.81. Diplomat shares were down 32.3% early Monday, while UnitedHealth shares were edged 0.3% lower.
Sanofi SA shares SNY, -1.47% edged lower on Monday after the French pharmaceutical company said that it will acquire biotechnology company Synthorx Inc. THOR, +170.14% for an aggregated equity value of around $2.5 billion. U.S.-listed shares of Sanofi fell 1.3%, while those for Synthorx soared 169%.
How are other markets faring?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -0.47% edged 1.6 basis points lower to 1.822% on weak economic data out of China.
West Texas Intermediate crude for January delivery CLF22, +1.20% on the New York Mercantile Exchange fell 14 cents, or 0.3%, to trade at $59.06 a barrel, on global growth concerns after gaining 7.3% gain last week, according to Dow Jones Market Data.
Gold prices on Monday opened higher, but dipped in midday trade. February gold GCG20, -0.03% on Comex was down 40 cents at $1,464.600 an ounce, after the yellow metal shed 1.2% on Friday and lost 0.5% for the week.
The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.05%, declined less than 0.1%, at 97.640, against a basket of a half-dozen currency peers. The index lost 0.6% last week.
European stocks ended slightly lower, with the Stoxx 600 Europe index SXXP, -0.24% closing down 0.2% at 406.39.
In Asia overnight Friday, the Hang Seng HSI, -0.01% finished little-changed, the China CSI 300 000300, -0.18% fell 0.2%, while the Shanghai Composite Index SHCOMP, +0.08% gained about 0.1%. Japan’s Nikkei 225 NIK, +0.33% rose 0.3%.
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