Dow bets 360-point U-turn and stocks tend to finish lower as investors point to concerns about the delta variant of COVID

U.S. stock indices gave up solid gains on Monday and equities ended lower for the most part as lingering concerns about the spread of the coronavirus delta strain causing COVID-19 excused modest sales on the first day of stock markets trading in August.

Investors also looked at progress on an infrastructure bill, merger activity and concerns about the pace and timing of the Fed’s plans to roll back its easy money policy.

How were major stock indices traded?
  • The Dow Jones Industrial Average DJIA,
    -0.28%
    fell 97.31 points, or 0.3%, to 34,838.16, after hitting an intraday high at 35,192.11.

  • The S&P 500 index SPX,
    -0.18%
    fell 8.10 points, or 0.2%, to 4,387.16, but had peaked Monday at 4,422.18.

  • The Nasdaq Composite Index COMP,
    +0.06%
    reached 8.39 points, or 0.06%, higher to close at 14,681.07, but had reached an intraday peak at 14,770.41.

Last week, major indices fell, with the S&P 500 losing 0.4% and Nasdaq Composite 1.1%, after 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?

Stock trading saw choppy trading with the start of the action in August, a seasonally tough time for stocks living up to their billing.

“Some of the [turbulence] reaches almost all records,” JJ Kinahan, chief market strategist at TD Ameritrade, told MarketWatch in a phone interview.

Concerns over the spread of the delta variant of COVID-19 fueled some caution on Wall Street, with the 10-year Treasury benchmarkBX:TMUBMUSD10Y at multi-month lows of less than 1.15%, putting a damper on the markets. Those concerns, coupled with growing jitters about the prospects for economic and business growth, are being dissected by investors.

Meanwhile, Fed Governor. Christopher Waller told CNBC in an interview Monday afternoon that the central bank should try to wind down the Fed’s $120 billion a month in asset purchases early and that “we need to move fast” to give policymakers enough ammunition to raise interest rates in 2022 if they face an overheated economy. should curb.

Waller’s comments come after Fed administration Lael Brainard indicated in a Friday night speech that she doesn’t think the central bank would be willing to announce a winding down of its bond-buying program at the Jackson Hole meeting at the end of the fiscal year. month. “I expect to be more confident in assessing progress once we have data in hand for September, when consumption, school and work patterns should normally settle after a pandemic,” she said.

Initially, markets had started the dog days of the summer optimistically, buoyed by some confidence in economic expansion and strong corporate earnings.

In one chart: Equity market investors ‘stare into the course of seasonal weakness for the next 3 months’

“The earnings season is largely over, and [with] the [Federal Open Market Committee] meeting and GDP, markets are entering a tough season with few catalysts to push the markets up,” wrote Mark Hackett, Nationwide’s chief of investment research.

“The bond market continues to reflect peak growth and a possible Fed policy error,” he noted.

Investors are also watching closely China’s efforts to rein in tech companies residing in the People’s Republic.

“The stars are aligned for the stock markets, with a stellar earnings season complemented by record-low real returns and hopes Congress will soon deliver more tax breaks,” said Marios Hadjikyriacos, senior investment analyst at XM. US senators last weekend closed the text of a $1 trillion infrastructure bill.

Read: Will Passing the “Performance Baton” Keep US Stocks Higher?

Looking ahead, September jobs data won’t come until October 8, according to the Labor Department’s release calendar, and the next Federal Open Market Committee meeting after that will end on November 3.

Meanwhile, an Institute for Supply Management manufacturing survey fell from 60.6 to 59.5 in July, with the index falling to a six-month low due to broad supply shortages.

“The ISM industry index remained well within expansion territory at 59.5 in July, but indicates manufacturing sector growth likely peaked earlier this year,” Oren Klachkin and Gregory Daco, economists at Oxford Economics, wrote in a note.

“Significant supply-side challenges remained as supplier deliveries continued to slow and input prices rose at a blazing pace,” the economists wrote.

The closely watched report comes after IHS Markit’s last reading for manufacturing PMIs was 63.4 in July, up from a first reading of 63.1. A reading of 50 or higher indicates improvement in conditions.

A separate report on US construction spending rose 0.1% in June.

Which companies were central?
  • In deal news, Square Inc.
    sq,
    +10.16%
    buys the Australian-listed buy-now pay-later company Afterpay Ltd.
    APT,
    +12.26%

    AFTPY,
    +35.16%
    for $29 billion in an all-stock deal. Square’s shares rose 10.2%.

  • Parker Hannifin Corp.
    PH,
    -2.11%
    said it is buying a British engineering firm Meggitt PLC
    MGGT,
    +56.68%

    sour CHERRY,
    +52.28%
    for $9 billion in cash, a 71% premium to Friday’s close. Shares of Parker Hannifin closed 2.1% lower.

  • News Corp.
    NWS,
    +0.60%
    announced an agreement Monday to buy Oil Price Information Service (OPIS) for $1.15 billion in cash, from S&P Global Inc.
    SPGI,
    +1.29%
    and IHS Markit Ltd.
    INFO,
    +0.98%.
    News Corp is the parent company of Dow Jones and MarketWatch, the publisher of this report. The shares of News Corp. were up about 0.6%, S&P Global’s was up 1.3% and IHS Markit shares were up about 1%.

How are other markets?
  • The 10-year Treasury yield was 6.6 basis points lower at 1.173%. Yields and debt prices move in opposite directions.

  • The ICE US Dollar Index DXY,
    -0.02%,
    a measure of the currency against a basket of six major rivals, fell 0.2%.

  • Oil futures lost ground, with US benchmark CL00,
    +0.31%
    Dropped $2.69 or 3.6% to close at $71.26 a barrel on the New York Mercantile Exchange, as gold futures GC00,
    -0.33%
    rose $5, or 0.3%, to close at $1,822.20 an ounce.

  • In European equities, the Stoxx Europe 600 SXXP,
    +0.59%
    closed 0.6% higher to hit an all-time high, while London’s FTSE 100 UKX,
    +0.70%
    advanced 0.7%.

  • In Asia, the Shanghai Composite SHCOMP,
    -0.73%
    jumped 2%, while the Hang Seng Index HSI,
    -1.21%
    rose 1.1% in Hong Kong. Japanese Nikkei 225 NIK,
    -0.89%
    rose 1.8%.

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