More Fed speakers ahead, after officials strike hawkish tone
U.S. stocks were little-changed on Monday, as investors found few reasons to keep pushing shares higher following a four-day rally that has taken Wall Street to repeated records.
Traders also absorbed recent comments from Federal Reserve officials, who hinted at the potential for more increases to interest rates in 2018 than the three currently priced in to the market on the back of a strengthening U.S. economy and fiscal stimulus.
What are stock indexes doing?
The Dow Jones Industrial Average fell 11 points to 25,283. The S&P 500 index was off 1.5 point to 2,742. The Nasdaq Composite Index slipped 1 point to 7,135. All three moved less than 0.1%.
All three major U.S. equity benchmarks posted record gains on Friday (http://www.marketwatch.com/story/sp-eyes-another-historic-record-run-with-us-jobs-data-on-deck-2018-01-05), finishing the first week of the new year with solid gains. Both the S&P 500 and the Nasdaq have closed at records in the first four sessions of the year, the first time the S&P has since 1964 (http://www.marketwatch.com/story/the-sp-500-is-poised-to-do-something-it-hasnt-done-since-1964-2018-01-04), according to WSJ Market Data Group.
What's driving the market?
A positive view for stocks that persisted in 2017 has continued into early 2018, despite Monday's muted action. The recently passed tax package in the U.S. is seen as a contributing factor, as are higher commodity prices and a run of solid economic data.
On Friday, Cleveland Fed President Loretta Mester told Reuters that she sees a strong U.S. economy as helping to make the case for four interest rate increases in 2018. In a separate interview with Reuters on Saturday, (https://www.reuters.com/article/us-usa-fed-williams/williams-paints-benign-picture-of-fed-rate-hikes-strong-u-s-economy-idUSKBN1EV0QH) San Francisco Fed President John Williams said the central bank should lift interest rates three times this year, because of the lift tax cuts will provide.
"We're in a pretty good situation: the economy is doing great, everyone expects us to raise rates gradually...and if the data change we can respond to that," said Williams, who added that he wasn't concerned about a sudden jump in inflation.
Upbeat corporate results are said to have been a driver as well, and investors will watch for fourth-quarter earnings from big banks, which will kick off fourth-quarter earnings season this week. JPMorgan Chase & Co. (JPM), BlackRock Inc (BLK) and Wells Fargo & Co. (WFC) are all scheduled to release reports on Friday. The results will provide insight into the state of American corporations in the current economic environment, as well as possibly giving some clarity into what impact the recently pass tax reform legislation could have on profits.
What are strategists saying?
J.J. Kinahan, chief market strategist at TD Ameritrade, suggested that many investors were waiting for the start of the earnings season before making big bets. "The multinational financial companies reporting on Friday really do set the trend. What they say about growth in the U.S. and world wide can give you a handle on what to expect from other companies," he said.
For 2018, Kinahan said he saw inflation and the reduction of the Federal Reserve's balance sheets as risks, although he remained fundamentally optimistic about stocks. "There's a reason we've had this incredible run," he said.
What economic news is ahead?
An update on consumer credit is the only major data release on the calendar for Monday, with the November report due at 3 p.m. Eastern Time.
Atlanta Fed President Raphael Bostic due to speak on the economic outlook and monetary policy at the Rotary Club of Atlanta at 12:40 p.m. Eastern.
Boston Fed President Eric Rosengren will take part in a panel discussion on whether Fed should stick to a 2% inflation target on Monday afternoon.
Which stocks are in focus?
The day's moves were slight, with most sectors trading essentially unchanged on the day. Among the more active industries were financial stocks, which were down 0.3%, and real estate, which rose 0.3%.
Nvidia Inc. (NVDA) shares rose 2.6%. At a pre-CES news conference in Las Vegas on Sunday, the chip maker announced a partnership with Uber Inc (http://www.marketwatch.com/story/nvidia-lands-uber-as-self-driving-partner-to-kick-off-ces-2018-01-08). to provide the ride-hailing company with self-driving hardware.
Shares of Celgene Corp.(CELG) rose 0.1% after the biotech group announced a deal to buy blood-disease biotechnology company Impact Biomedicines (http://www.marketwatch.com/story/celgene-said-to-be-near-7-billion-deal-to-buy-impact-biomedicines-2018-01-07) for as much as $7 billion.
Read:Why 2018 is a make-or-break year for pharma (http://www.marketwatch.com/story/why-2018-is-a-make-or-break-year-for-pharma-2017-12-19)
GoPro Inc.(GPRO) gave a fourth-quarter revenue forecast that was sharply below analyst expectations. The stock was halted in early trading.
Both FedEx Corp.(FDX) and United Parcel Service Inc.(UPS) were upgraded at UBS, which could provide further upside for the transportation sector. Shares of FedEx rose 1.1% while UPS was up 0.9%.
Dave & Buster's Entertainment Inc.(PLAY) tumbled 16% after the company cut its 2017 profit and sales outlook.
What are other markets doing?
Asian markets continued to rally (http://www.marketwatch.com/story/asian-markets-largely-gain-though-regulatory-moves-weigh-in-china-hong-kong-2018-01-07), with Taiwanese stocks soaring to a 28-year high, but with Japanese markets closed for a holiday. In Europe, the Stoxx Europe 600 index was posting modest gains (http://www.marketwatch.com/story/european-stocks-stick-to-2-year-highs-despite-german-orders-disappointment-2018-01-08).
The ICE dollar index added 0.4% to 92.226, to hit a 2018 high (http://www.marketwatch.com/story/dollar-jumps-to-2018-high-after-fed-members-strike-hawkish-tone-2018-01-08).
Oil prices gained 0.3% to $61.63 a barrel, while gold slipped 0.1% to $1,320.50 an ounce.
In cryptocurrencies, bitcoin futures on the CME fell 10% to $14,930 from Friday's settlement of $16,590 (http://www.marketwatch.com/story/bitcoin-pulls-back-further-from-17000-2018-01-08). That is after bitcoin spot prices topped $17,000 over the weekend, although they have pulled back Monday. Ether coins on the Ethereum blockchain tapped a new all-time high atop $1,200 on Monday, but are now lower, according to CoinDesk.
(END) Dow Jones Newswires
January 08, 2018 09:55 ET (14:55 GMT)