Markets Wrap Up Volatile January Higher, but Lower for Month…..

U.S. equites closed the book on a volatile January with gains, but significant losses on a monthly basis, with the Nasdaq able to finish just out of correction territory. The volatility has come courtesy of concerns about persistent inflation pressures and heightened expectations that the Fed will have to be more aggressive with its monetary policy tightening campaign to squelch them. To kick off a robust economic calendar for the week that will be headlined by Friday’s key nonfarm payroll report, regional manufacturing reports out of Chicago and Dallas showed growth remained, with the former accelerating, but the latter decelerating. Ahead of a flood of upcoming earnings, M&A news dominated the equity front today, with LXP Industrial Trust receiving interest from hedge fund Land & Buildings Investment Management LLC about acquiring the real estate investment trust, and Citrix Systems announced an agreement to be acquired by affiliates of Vista Equity Partners and Elliott Investment Management LP. Treasuries were slightly lower, modestly lifting yields, after last week’s decisive flattening of the yield curve, and the U.S. dollar lost ground to trim some of last week’s rally. Crude oil prices were higher and gold advanced. Europe finished mostly higher ahead of monetary policy decisions this week from the European Central Bank and the Bank of England, while markets in Asia were mixed in lighter-than-usual volume as markets in China and South Korea were closed ahead of the lunar new year.

The Dow Jones Industrial Average rose 406 points (1.2%) to 35,132, the S&P 500 Index increased 84 points (1.9%) to 4,516, and the Nasdaq Composite advanced 469 points (3.4%) to 14,240. In heavy volume, 5.0 billion shares of NYSE-listed stocks were traded, and 5.1 billion shares changed hands on the Nasdaq. WTI crude oil gained $1.33 to $88.15 per barrel. Elsewhere, the gold spot price traded $12.60 higher at $1,799.20 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.7% at 96.60. Markets were noticeably lower for the month, as the DJIA fell 3.3%, the S&P 500 tumbled 5.3%, and the Nasdaq Composite plunged 9.0%.

The Chicago PMI unexpectedly moved further into a level depicting expansion (a reading above 50). The index rose to 65.2 in January from December’s 64.3 reading, versus the Bloomberg estimate calling for a decrease to 61.5. The stronger-than-expected report came as growth in new orders and production continued, but supplier delivery times expanded at a faster pace, and employment remained in contraction. Prices paid did decelerate but remained in expansion territory.

The Dallas Fed Manufacturing Index unexpectedly fell and remained slightly in expansion territory (a reading above zero) for January. The index fell to 2.0 from 7.8 in December and compared to forecasts calling for an 8.0 reading. Production and shipments fell but continued to depict expansion, while shipments dropped solidly but remained above zero. Growth in new orders accelerated slightly and employment growth slipped.

Treasuries were mostly lower, as the yield on the 2-year note was flat at 1.17%, while the yield on the 10-year note ticked 1 basis point (bp) higher to 1.79%, and the 30-year bond rate was up 3 bps at 2.11%.

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