Stocks Lower to Begin a Busy Week…..

U.S. equities began the new week lower, which is poised to bring some key June inflation data and the start of Q2 earnings season. Inflation has been the main catalyst for the Fed to tighten monetary policy aggressively, which has fostered recession concerns to ramp up. In equity news, Twitter was in focus after Elon Musk late-Friday made a move to abandon his $44.0 billion takeover agreement with the social media company, while casino operators fell as Macau began a one-week shutdown aimed at containing the spread of COVID. The economic calendar was dormant today but will heat up later this week as retail sales and consumer sentiment reports will join the inflation data. Treasuries rose to apply downside pressure on yields, and the U.S. dollar extended a recent rally that has seen the greenback reach 20-year highs. Crude oil prices fell, and gold finished to the downside. Europe was mixed as the markets continued to contend with lingering recessions concerns and ahead of the U.S. data. Asia finished mostly lower, though Japan managed to gain ground, with China and Hong Kong leading the drop amid resurfacing COVID concerns and regulatory fines being levied on some key companies in the region.

The Dow Jones Industrial Average lost 164 points (0.5%) to 31,174, the S&P 500 Index decreased 45 points (1.2%) to 3,854, and the Nasdaq Composite tumbled 263 points (2.3%) to 11,373. In moderately-light volume, 3.4 billion shares of NYSE-listed stocks were traded, and 4.3 billion shares changed hands on the Nasdaq. WTI crude oil lost $0.70 to $104.09 per barrel. Elsewhere, the gold spot price was $12.50 lower at $1,728.80 per ounce, and the Dollar Index rallied 1.1% to 108.20.

The markets came under pressure to begin the week that will be highlighted by the start of Q2 earnings season which will command market attention for the next several weeks. The Financials sector will be in focus as the big institutions will get the ball rolling with their results. The markets will likely scrutinize any guidance moving forward, data and forecasts on consumer activity, trading revenues from the equity and fixed income markets amid the backdrop of elevated volatility, and investment banking activity as IPOs and M&A action has cooled.

Mortgage lending could also garner focus given the recent slowdown in the housing market amid the spike in interest rates.

Treasuries traded higher with yields seeing pressure after rebounding last week as the economic calendar today was void of any major releases, while some key June inflation reports are due out later this week. Inflation has driven the Fed to get aggressive with its monetary policy. The yield on the 2-year Treasury note was down 4 basis points (bps) to 3.08%, the yield on the 10-year note declined 11 bps to 2.99%, and the 30-year bond rate fell 9 bps to 3.17%.

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