Stocks finished mixed on Monday, as late-day profit-taking trimmed some of the gains seen since the release of the government’s jobs report late last week. The Dow finished lower, while the Nasdaq held a portion of its gains into the close. The S&P 500 ended just below the flat line.
The Nasdaq Composite (COMP.IND) finished +0.6%, S&P 500 (SP500) closed -0.1% and the Dow (DJI) ended -0.3%.
After showing gains earlier in the day, the Dow Jones ended lower by 112.96, concluding trading at 33,517.65. The S&P 500 likewise surrendered an early advance. After briefly ticking above 3,950 in midday action, the benchmark index closed at 3,892.09, a dip of 2.99 points.
While the Nasdaq also came off its intraday peak, the index managed to hold gains into the closing bell. The tech-heavy average rose 66.36 points to finish at 10,635.65.
Six of the 11 S&P sectors posted weakness. However, only Consumer Staples and Health Care saw losses of more than 1%. Declines in Energy, Financials and Industrials were modest, while Real Estate posted a fractional dip. Info Tech, Utilities, Materials and Consumer Discretionary all ended higher.
“Big tech was having a day, but sellers emerged by the late morning to bring the S&P 500 back to near the flat line by the close,” analyst Mike Zaccardi told Seeking Alpha. “Expect more back and forth between the bulls and bears this week before key December CPI data on Thursday morning and then the kick-off of earnings season Friday when several major companies from the Financials sector report Q4 results.”
Zaccardi added: “Investors have turned more upbeat about the prospects for a soft landing following last Friday’s jobs report which should weaker YoY hourly earnings data. The S&P 500 is still no bargain, though, as it trades about 17 times forecasted 2023 earnings.”
Following a substantial rally on Friday, stocks attempted to extend their gains in Monday’s early action. However, the wave of gains crested in the late morning, as investors trimmed their positions following a day and a half of upward momentum.
Friday’s upswing came after the Department of Labor revealed its December employment statistics. Headline numbers pointed to yet another month of strength in the labor market. However, there were signs of slowing wage growth and a downward revision to previous data.
Investors interpreted Friday’s data as a sign that the Federal Reserve might not need to keep its ultra-hawkish policy in place as long as many had feared.
Looking at Monday’s fixed-income markets, rates slipped again, adding to a sharp slide seen on Friday. The 10-year Treasury yield (US10Y) dipped 4 basis points to 3.53%. The 2-year yield (US2Y) retreated 6 basis points to 4.20%.
Among active stocks, Alibaba (BABA) was a notable gainer, with the stock rising after founder Jack Ma ceded control of the firm’s sister company, Ant Group. Meanwhile, Arrowhead Pharmaceuticals (ARWR) dropped following release of data from a mid-stage trial of its liver disease drug.