The S&P 500 and the Nasdaq Composite booked fresh closing records on Monday, as stock-market investors piled into technology and consumer discretionary shares, but the Dow Jones Industrials finished lower.
Energy prices ended higher as officials begin to tally up damage from Hurricane Ida on the Gulf Coast.
How did stock benchmarks perform?
The Dow Jones Industrial Average
fell 55.96 points, or 0.2%, to end at 35,399.84.
The S&P 500
gained 0.4%, or 19.42 points, finishing at a record 4,528.79, after establishing an intraday record at 4,537.36.
The Nasdaq Composite Index
rose 136.39 points, or 0.9%, closing at a record 15,265.89, after setting its intraday all-time high at 15,288.08.
On Friday, the Dow rose 242.68 points, or 0.7%, to 35,455.80; the S&P 500 advanced 39.37 points, or 0.9%, to a record 4,509.37; and the Nasdaq Composite Index jumped 183.69 points, or 1.2%, to a record 15,129.50. The small-capitalization Russell 2000 index
climbed 63.17 points, or 2.9%, to 2,277.15.
What drove markets?
Investors added information technology and consumer discretionary stocks, which helped support the S&P 500 sweep to its 53rd record close of the year. For its part, the tech-heavy Nasdaq Composite booked its 32nd record finish of 2021, with gains coming as Treasury note yields receded, paving the way for increases in sectors that tend to be rate-sensitive.
Not everyone was cheering stocks’ march ever higher. “I’m nervous about the market,” said Kent Engelke, chief economic strategist at Capitol Securities Management, adding that while technology stocks were rising in the last trading days of August, September historically has been a rough month for equities.
See: What an A.I.-based stock picker says about the market as delta variant delays ‘return to office’
This September comes with added concerns about the recent spike in the cost of living in the U.S., turbulence in Afghanistan and the delta variant of the coronavirus, but also expectations for the Federal Reserve to provide a road map for its eventual pullback of pandemic support for markets.
Read: Stock-market investors scour alternative data for delta variant clues — here’s what they see
“I don’t think inflationary pressures are going to be transitory,” said Engelke, in a phone interview, adding that he thinks the S&P 500 and Nasdaq Composite could reprice by 5% to 15% by the end of 2021, as equity investors adjust to rising costs, including wages, that could prove more than temporary.
Stock-market gains follow Friday’s comments from Fed Chairman Jerome Powell, who said he favored tapering the Fed’s monthly purchases of $80 billion of Treasurys and $40 billion of mortgage-backed securities beginning this year, but remained vague about the timetable. He also said several factors indicated higher inflation will be temporary, and that the tapering process wouldn’t be meant to signal that rate increases were imminent.
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But after five quarters in a row of “eye-popping earnings numbers,” Michael Arone, chief investment strategist at State Street Global Advisors, thinks investors could end up getting “a wake-up call” if more U.S. companies follow in the footsteps of several tech giants and start to lower future earnings and growth rates.
If even a suggestion of “less spectacular” future earnings estimates starts to rattle “other economic sectors, the market rally could be in for a rough patch,” Arone wrote, in a new market note.
Commodities also were in focus after Hurricane Ida, now weakened to a tropical storm, ripped through the Gulf Coast, prompting search-and-rescue missions to the hardest-hit areas and leaving southeast Louisiana without power, including New Orleans. It was pegged as the fifth-strongest hurricane to ever hit the U.S.
prices rose 0.7% to settle at $69.21 a barrel, while gasoline futures
climbed 1.7% to end at $2.31 a gallon. Nearly 95% of U.S. oil and gas production in the Gulf Coast region was offline, according to S&P Global Platts.
In economic reports, pending home sales fell 1.8% in July, compared with June, the National Association of Realtors reported Monday. Economists polled by MarketWatch had projected a 0.5% increase for pending home sales in July. Investors also will tune into the August jobs report on Friday.
Read: Delta might stunt U.S. job creation in August, but not enough to derail economy
Which companies were in focus?
PayPal Holdings Inc.
shares rose 3.6% Monday after a report highlighted the company’s hire of an executive to lead its consumer-investing efforts.
- Shares of Li Auto Inc. LI declined 1.1%, even after the China-based electric vehicle maker reported a surprise second-quarter loss, but revenue that beat expectations as deliveries nearly tripled and provided an upbeat outlook.
- Catalent Inc. CTLT said Monday it has reached an agreement to acquire Bettera Holdings LLC, a maker of gummy, soft chew and lozenges as nutritional supplements, from Highlander Partners LP for $1 billion in cash. Shares of Catalent rose 0.4%.
- Shares of Ideanomics Inc. IDEX rose 4.8% Monday, after the electric-vehicle adoption facilitator and financial services company announced a deal to buy electric commercial-vehicle company VIA Motors International Inc. in a stock deal valuing VIA at $450 million.
- Specialty chemicals company H.B. Fuller FUL said Monday it is planning to implement an 11% surcharge on global shipments of its products starting Sept. 1, as it moves to combat rising costs of chemical feedstocks and plastic and metal packaging. Its stock fell 0.8%.
- Adtran Inc. ADTN announced Monday an agreement to acquire networking services company ADVA in a deal valued at EUR789 million ($931.1 million). Its stock fell 16.5%.
- PNC Financial Services Group Inc. PNC said Monday that it would raise its minimum wage to $18 an hour, starting Nov. 22, about three years after it raised it to $15 an hour. Shares of the company fell 2%.
How did other assets fare?
- The yield on the 10-year Treasury note BX:TMUBMUSD10Y eased back on Monday, down 2.7 basis points to 1.284%, though it rose 5.2 basis points last week, the biggest one-week gain since June 25.
- Gold futures GC00 closed 0.4% lower Monday to settle at $1,812.20 an ounce on Comex.
- In European equities, the Stoxx Europe 600 SXXP, closed up 0.1%, while London’s FTSE 100 was closed for a bank holiday.
- In Asia, the Shanghai Composite SHCOMP closed 0.2% higher and Hong Kong’s Hang Seng Index HSI rose 0.5%, while Japan’s Nikkei 225 NIK also gained 0.5% on the session.
—Barbara Kollmeyer contributed reporting