By William Watts and Mark DeCambre
S&P 500 briefly reclaims 4,200 perch
U.S. stock indexes climbed Monday, with the Dow on track for a third straight advance, as technology stocks charged higher to begin the final week of trade for May.
What are major indexes doing?
The Dow last week fell 0.5%, while the S&P 500 gave up 0.4%, with both indexes suffering their second straight weekly fall. The Nasdaq Composite advanced 0.3%, snapping a run of four consecutive weekly declines.
What’s driving the market?
Stocks edged higher Monday despite uncertainty around the next phase of the economic recovery, as businesses grapple with stressed supply chains, soaring consumer demand and climbing prices as the world reboots from the pandemic.
“With the market pretty much rangebound these past two months, stocks head into the final full week of the month trying to break a two-week bull-bear stalemate,” said Chris Larkin, managing director, trading and investing product, at E-Trade Financial, in emailed comments on Monday.
“Fed minutes last week seemed to have been shrugged off as the Fed continues its wait and see posture, which added wind beneath the tech sector’s wings,” Larkin said
Rising inflation pressures are getting the blame for heightened stock-market volatility after data earlier this month showed the consumer-price index rose a hotter-than-expected 4.2% year-over-year in April. That prompted fears the Fed could move earlier than anticipated to begin pulling back on its monetary policy accommodation.
Read:Inflation scare? the stocks that perform best — and worst — when prices rise (link)
Most Fed officials have maintained that it remains too early to begin contemplating the withdrawal of monetary support.
Meanwhile, stocks last week largely echoed the price action of the previous week, slumping early before enjoying a late-week bounce, said Sam Stovall, chief investment strategist at CFRA.
“Since the market’s low on May 19 did not undercut the low from the prior week, however, it was viewed as a successful retest of that earlier low, indicating that the recent selloff had run its course and that a near-term rally was likely at hand,” Stovall said, in a note.
Talks continue around President Joe Biden’s infrastructure push. The White House on Friday trimmed the size of its proposal from $2.3 trillion to $1.7 trillion (link) in an effort to win Republican support.
The effort failed to bear fruit with Senate Republicans so far, according to news reports (link), raising doubts about the prospects for a deal before a Memorial Day target. Democrats could attempt to move on their own if the stalemate continues, using budget reconciliation procedures.
Volatility in the cryptocurrency markets also remained in focus. Bitcoin extended a slump over the weekend to fall as much as 50% from its all-time high (link) above $60,000. Bitcoin was up around 10% in recent action.
Read: ‘Where the crypto market goes from here is completely dependent on the stock market,’ says digital-asset tycoon Barry Silbert (link)
-William Watts; 415-439-6400; AskNewswires@dowjones.com
Which companies are in focus?
How are other assets faring?
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