Stock market wobbles after Nasdaq hits fresh intraday record, with investors awaiting earnings, Powell and fresh data

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U.S. stocks traded mixed Monday morning, with the Dow Jones Industrial Average and S&P 500 struggling for altitude while the Nasdaq Composite touched an intraday record high before pulling back.

Investors were awaiting semiannual testimony from Federal Reserve Chairman Jerome Powell beginning Wednesday and a batch of economic reports throughout the week. The week also will see the unofficial start of corporate quarterly results.

See: A crazy week for U.S. stocks came with a change in the market narrative—should investors believe it?

How are stock benchmarks trading?
  • The Dow Jones Industrial Average DJIA, +0.31% was 66 points, or 0.2%, higher at 34,936.
  • S&P 500 index SPX, +0.22% is trading little-changed at about 4,370.
  • Nasdaq Composite Index COMP, -0.02% traded 13 points, or 0.1%, lower at 14,690, after establishing an intraday all-time high at 14,761.08.

On Friday, the Dow and S&P 500 finished the session at record highs, booking weekly gains of about 0.2% and 0.4%, respectively. The Nasdaq Composite finished the week at an all-time high with a 0.4% weekly gain. 

What’s driving the market?

After a record finish for all three equity benchmarks Friday, markets were on uncertain footing Monday ahead of a number of key events that could serve as catalysts later in the week. The unofficial start of earnings season, which JPMorgan Chase & Co. JPM, +0.96% will kick off Tuesday, Powell’s testimony on Capitol Hill, and fresh readings on inflation will likely be the big stories of the week.

Equity markets experienced a bout of turbulence last week before ending with a flourish, prompted partly by a drop in Treasury yields, which raised questions about the outlook for the U.S. economy in the recovery from the pandemic, amid a surge in the spread of the Delta variant of COVID-19, and lofty valuations being assigned to some segments of the market.

Questions about the Fed’s monetary policy in the face of growing evidence of percolating inflation also have been blamed for some of the rocky trading.

Yields for the 10-year TMUBMUSD10Y, 1.361% and 30-year Treasury yields TMUBMUSD30Y, 1.987% touched lows not seen since February and were still hanging around those levels on Monday morning.

Although concerns about COVID variants continue to buffet upbeat sentiment, some strategists said that if the continued spread of variants delays the rollback of market-stimulative measures by the Fed, then it could ultimately be perceived as a positive factor for bullish investors.

Fawad Razaqzada, market analyst with ThinkMarkets, said COVID infections are “more of a concern for emerging markets since vaccinations in those regions are still moving slowly.”

The U.S. leads the world with a total of 33.85 million cases and in deaths with 607,156. Dr. Anthony Fauci said Sunday it was “horrifying” to see conservatives cheer for low vaccination rates, blaming “ideological rigidity” for hobbling the fight against COVID-19. Fauci, President Joe Biden’s top pandemic adviser, spoke Sunday on CNN.

“Still, with the markets relaying so much on central bank support, anything that causes a delay in tapering QE purchases should be positive for stocks. So, I doubt Monday’s weakness will last very long,” Razaqzada added, referencing the $120 billion a month asset-purchase program known as QE, or quantitative easing.

No key data were on deck Monday ahead of a busy week in economic reports, starting with a reading of consumer prices on Tuesday.

Meanwhile, New York Federal Reserve President John Williams is set to speak at 9 a.m. Eastern Time, and Minnesota Fed President Neel Kashkari is scheduled to speak at 12 p.m.

Which companies are in focus?
  • Shares of Virgin Galactic Holdings Inc. SPCE fell around 11% Monday, a day after founder Richard Branson and five crewmates successfully flew suborbital space on the company’s VSS Unity rocket-powered spaceplane.
  • Couchbase IncBASE, a provider of a database for enterprise applications, set terms for its initial public offering on Monday, with plans to offer 7 million shares, priced at $20 to $23 each. The company has applied to list on Nasdaq, under the ticker ‘BASE.’