Stocks Mixed in Another Choppy Trading Session…..
U.S. equities finished mixed, with the volatility that has marked the start of the year and contributed to last week’s wild ride persisting. The skittishness is likely to remain as the global markets adjust to the prospect of tighter monetary policies, as well as geopolitical tensions between Russia and Ukraine, and a mixed Q4 earnings season, which will continue to roll on this week. However, M&A news is what dominated the equity headlines today, with Spirit Airlines and Frontier Group Holdings announcing an agreement to merge, while Peloton Interactive is reportedly exploring takeover options. Treasuries were slightly higher, putting downward pressure on yields following last week’s drop that came in the wake of by Friday’s much stronger-than-expected January labor report, and the U.S. dollar ticked lower. Meanwhile, crude oil prices lost ground and gold traded to the upside. The economic calendar was subdued, only showing that consumer borrowing cooled during December, but it is set to deliver key reads on inflation and consumer sentiment in the second half of the week. Europe finished mixed on the heels of last week’s monetary policy decisions in the region, while markets in Asia also diverged, with Chinese markets returning to action following an extended holiday.
The Dow Jones Industrial Average nudged 1 point higher to 35,091, while the S&P 500 Index decreased 17 points (0.4%) to 4,484, and the Nasdaq Composite declined 82 points (0.6%) to 14,016. In heavy volume, 4.1 billion shares of NYSE-listed stocks were traded, and 4.2 billion shares changed hands on the Nasdaq. WTI crude oil lost $0.99 to $91.32 per barrel. Elsewhere, the gold spot price traded $14.70 higher to $1,822.50 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—ticked 0.1% lower to 95.44.
Consumer credit, released in the final hour of trading, showed consumer borrowing was $18.9 billion during December, short of the $25.0 billion forecast of economists polled by Bloomberg, while November’s figure was adjusted downward to $38.9 billion from the originally reported $39.9 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, was $16.8 billion, a 6.0% increase year-over-year (y/y), while revolving debt, which includes credit cards, was $2.1 billion, a 2.4% y/y rise.
Treasuries were mixed but little changed, as the yield on the 2-year note lost 2 basis points (bps) to 1.29%, while the yields on the 10-year note and the 30-year bond dipped 1 bp to 1.91% and 2.22%, respectively.
Treasury yields moved higher last week and continue to be choppy with the markets grappling with growing expectations that the Fed may have to aggressively tighten monetary policy, with its first rate hike expected in March to combat persisting inflation pressures. The Fed has suggested multiple rate hikes are coming this year and after it begins to raise rates, it intends on commencing its balance sheet reduction campaign, known as quantitative tightening.
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