U.S. stock index futures were unchanged in overnight trading Monday, after the major averages started the week with muted moves as investors digested a jump in yields.
Futures contracts tied to the Dow Jones Industrial Average gained 18 points. S&P 500 futures were up 0.03%, while Nasdaq 100 futures added 0.04%.
During regular trading the Dow dipped about 13 points, or 0.04%, for its fourth negative session in the last five. At the high of the day the 30-stock index gained about 136 points. The S&P 500 finished the day unchanged at 4,682.87. The benchmark index moved between gains and losses during the session, at one point gaining 0.3%, while also trading 0.21% lower. The Nasdaq Composite dipped 0.04%. The Russell 2000 was the relative underperformer, declining 0.45%.
Stocks’ move came as interest rates rose, with the yield on the 10-year Treasury note topping 1.62% while the 30-bear Treasury bond rose above 2%.
Inflation fears are weighing on the market after last month’s consumer price index posted its largest annual increase in more than three decades. Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, said he believes inflation will moderate in 2022, but that “the path to lower inflation [will] begin with higher inflation in the front half of the year.”
“The stickier drivers of inflation are likely to persist, but our base case is that they will not outweigh the improvement we expect in the transitory elements,” he wrote in a note to clients.
Walmart kicks off a busy week of retail earnings on Tuesday before the market opens, which will give investors a look at how much consumers are spending. Home Depot also reports before the market opens, while Target will post results on Wednesday.
A slew of economic data will be released on Tuesday, including retail sales figures for October. Economists surveyed by Dow Jones are expecting sales to have jumped by 1.5% last month, compared with 0.7% in September. Industrial production numbers will also be released, as well as the NAHB housing market index survey.
On Monday afternoon President Joe Biden signed the $1 trillion bipartisan infrastructure bill into law. The package includes funding for transportation, broadband and utilities.
The major averages are coming off their first negative week in six, but stocks are still trading around all-time high levels. As Wall Street strategists look to 2022 some, including Morgan Stanley’s Michael Wilson, believe the picture looks muted.
“With financial conditions tightening and earnings growth slowing, the 12-month risk/reward for the broad indices looks unattractive at current prices,” he said Monday in a note to clients. “However, strong nominal GDP growth should continue to provide plenty of good investment opportunities at the stock level for active managers,” he added. His 12-month base target for the S&P 500 is 4,400, which is 6% below where the index closed on Monday.
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