S&P 500, Dow and Nasdaq end slightly lower as investors look ahead to retail sales, Walmart earnings

Stocks traded mixed on Monday as investors monitored upbeat economic data out of China and awaited key retail sales and earnings results out from major U.S. companies later this week. 

The S&P 500, Dow and Nasdaq struggled for direction after opening decidedly higher. Boeing (BA) shares rose after the aircraft-maker’s head of commercial airplanes told Bloomberg he was “hopeful” that China would resume orders of the 737 Max soon following more than two years of grounding. The company also said it booked a number of orders following the 2021 Dubai Airshow, including for two 777 Freighters with Emirates.

Stronger-than-expected economic data out of China also helped lift traders’ sentiment at the start of the week. The world’s second-largest economy saw both retail sales and industrial production unexpectedly accelerate in October over last year, suggesting the economic impact from multiple COVID-19 waves and stay-in-place restrictions was beginning to ease. However, new-home prices in China fell by about 0.25% in October versus September, marking the biggest drop in more than six years as the country’s real estate market came under continued pressure. 

Investors this week are also set to receive new data from the Commerce Department on U.S. retail sales. The report is likely to show a 1.3% month-on-month jump in sales for October after a more sanguine 0.7% rise in September. And retail earnings results from major names including Walmart (WMT), Target (TGT), Home Depot (HD) and Lowe’s (LOW) will offer additional details on the state of the consumer. 

For U.S. stocks, last week marked a brief pause after a record-setting run-up. The S&P 500 posted a weekly decline for the first time in six weeks, but remained within 0.8% of its all-time intraday high as of Friday’s close. The Dow and Nasdaq were also not far off from their own record levels. 

A hotter-than-expected Consumer Price Index (CPI) last week tempered some of investors’ ebullience for equities, and suggested heightened inflationary pressures were stickier than previously expected. The CPI jumped by a greater-than-expected 6.2% in October compared to the prior year, marking the fastest annual rise since 1990. Meanwhile, the latest print on U.S. job openings came in higher-than-expected to a near-record high of more than 10.4 million, and a separate report showed consumer sentiment deteriorated early this month as Americans nervously eyed rising prices. 

The jump in inflation carries implications both for consumers’ personal finances and for monetary policy. 

“The surge in core inflation in October marks the start of a run of big gains, thanks to surging used auto prices, rebounding airline fares, and faster increases in housing costs,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note Monday. “We think core inflation will peak at almost 7% in March, which will pose a serious challenge to the Fed’s benign medium-term view. Chair [Jerome] Powell will have to convince markets that the combination of rocketing payrolls and soaring inflation does not threaten the transitory story, to which he appears still to be committed.” 

Though the Federal Reserve has maintained current inflationary pressures will be temporary, sustained increases of these elevated magnitudes could prompt a quicker-than-previously-expected hike to interest rates, which would in turn impact a variety of asset classes.

“We remain of the view that the Fed will start to hike in September, but a June hike can’t be ruled out. If labor participation shows no sign of life by the March FOMC meeting, we expect the Fed to accelerate the taper and then hike in June. This would play badly across all asset markets,” Shepherdson added. “Treasury yields still have to rise, but rising real yields due to strong non-inflationary growth are vastly preferable to rising inflation expectations. High-multiple stocks and loss-making tech would be vulnerable even in the benign scenario, but cyclicals would outperform.” 

4:06 p.m. ET: S&P 500, Dow and Nasdaq end slightly lower as investors look ahead to retail sales, Walmart earnings

Here were the main moves in markets as of 4:06 p.m. ET:

  • S&P 500 (^GSPC): -0.05 (-0.00%) to 4,682.80

  • Dow (^DJI): -12.86 (-0.04%) to 36,087.45

  • Nasdaq (^IXIC): -7.11 (-0.04%) to 15,853.85

  • Crude (CL=F): +$0.10 (+0.12%) to $80.89 a barrel

  • Gold (GC=F): -$3.00 (-0.16%) to $1,865.50 per ounce

  • 10-year Treasury (^TNX): +4.1 bps to yield 1.6230%

3:02 p.m. ET: U.S. sees oil output in Permian Basin reaching record next month

U.S. crude oil output from the Permian Basin of West Texas and New Mexico is set to jump to a record 4.95 million barrels per day in December, a new government forecast showed on Monday. This would bring production in the key U.S. shale patch well above its pre-pandemic average from March 2020.

Crude oil prices have so far been on a tear for the year-to-date, with a rapid surge in energy demand taking place as vaccinations occurred and mobility picked up. The government report Monday reaffirms that more supply may be taking place domestically in the near-term, helping to put a ceiling on prices after a 66% run-up in WTI crude so far this year.  

“Supply has to come back to the marketplace here,” Scott Bauer, CEO of Prosper Trading Academy, told Yahoo Finance Live earlier on Monday. “The good sign is for right now, is, oil rigs, the amount of rigs that get counted out there, that is rising. It actually rose by 6 last week. It’s the highest level that we’ve seen in about a year-and-a-half, so that means that maybe there will be some more drilling out there.”

9:52 a.m. ET: Empire Manufacturing index rebounds in November to top expectations

The regional Empire Manufacturing index for New York state jumped far more than expected in November after sliding in October, with a pick-up in employment at goods-producing firms helping buoy results.

The broadest business activity index for the region rose to 30.9 in November from 19.8 in October, exceeding estimates for 22.0, according to Bloomberg data. 

Beneath the headline index, employment grew at its fastest pace on record and the average workweek rose, according to the survey. However, in a sign of persistent supply-related disruptions and inflationary pressures, unfilled orders increased, and an index tracking prices paid held near a record high.

9:37 a.m. ET: Oatly shares slide by 20% after missing Q3 sales, cutting forecast

Oatly (OTLY) slumped by 20% Monday morning after posting third-quarter sales that sharply missed estimates and cutting its guidance for the year, as supply-chain and virus-related disruptions weighed on the oat milk-maker’s results. 

Revenue came in at $171.1 million in the third quarter, falling short of expectations for $185.7 million, based on Bloomberg data. The company now also sees revenue coming in at more than $635 million for the year, or down from its previous forecast for more than $690 million. 

“In EMEA, we are starting to build supply to meet consumer demand, but the pace at which we expected to increase revenue in new and existing retailers and to open new markets is slower than we anticipated as we navigate a dynamic COVID operating environment,” Oatly said in its earnings report. “We believe this is primarily a timing issue and in the first half of 2022, we expect to have an increased share of shelf space at retail given our strong velocities and current supply levels.” 

“In the Americas, we are pleased with the weekly production output improvements at our Ogden, Utah facility to-date in the fourth quarter, as we navigate a challenging supply chain environment,” the company added. “Finally, in Asia strict public health measures remain in effect due to an increase in cases of the COVID-19 Delta-variant. We are closely monitoring the situation and remain focused on the health and safety of our team.” 

9:30 a.m. ET: Stocks kick off the week in trading on a high note

Here’s where markets were trading after the opening bell on Monday:

  • S&P 500 (^GSPC): 4,692.44, +9.59 (+0.2%)

  • Dow (^DJI): 36,128.83, +28.52 (+0.08%)

  • Nasdaq (^IXIC): 15,891.14, +32.35 (+0.2%)

  • Crude (CL=F): -$1.04 (-1.29%) to $79.75 a barrel

  • Gold (GC=F): -$3.00 (-0.16%) to $1,865.50 per ounce

  • 10-year Treasury (^TNX): -0.9 bps to yield 1.582%

7:20 a.m. ET Monday: Stock futures point to a higher open

Here’s where markets were trading Monday morning: 

  • S&P 500 futures (ES=F): +10.5 points (+0.22%), to 4,688.75

  • Dow futures (YM=F): +102 points (+0.28%), to 36,115.00

  • Nasdaq futures (NQ=F): +40.75 points (+0.25%) to 16,233.50

  • Crude (CL=F): -$1.13 (-1.4%) to $79.66 a barrel

  • Gold (GC=F): -$2.30 (-0.12%) to $1,866.20 per ounce

  • 10-year Treasury (^TNX): -2.9 bps to yield 1.555%

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 20, 2021. REUTERS/Brendan McDermid

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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