Stocks were mixed Monday as investors closely monitored developments in Washington, D.C., as lawmakers rush to try and avert a government shutdown and advance a bevy of new measures.
The S&P 500 fell to give back some gains after the blue-chip index posted a three-day winning streak at the end of last week. The Nasdaq lagged with a drop of 0.5% as Treasury yields climbed. The benchmark 10-year yield extended last week's gains to top 1.5%, reaching its highest level since June as optimism over the economic recovery mounted. The Dow added about 0.2%, with energy shares outperforming during Monday's session.
Investors are kicking off trading this week following a volatile streak of trading, with the potential default of key Chinese property developer Evergrande and concerns over monetary and fiscal policy front and center. At its lowest closing level last week, the S&P 500 had pulled back just over 4% from its Sept. 2 record closing high. The index, however, has since recouped most of those gains, and traded about 1.8% below its all-time closing high by the end of Friday's session.
This week, investors will be watching developments on the fiscal front especially closely. Lawmakers are racing to vote in the coming days on legislation to fund the government beyond the end of the fiscal year on Thursday and prevent a government shutdown. This will come against a backdrop of ongoing debates around a bipartisan $1 trillion infrastructure deal and $3.5 trillion budget reconciliation package.
And elsewhere, Federal Reserve Chair Jerome Powell is set to testify with Treasury Secretary Janet Yellen before the Senate Banking Committee on Tuesday, and the House Financial Services Committee on Thursday, on the Fed and Treasury's responses to the coronavirus pandemic.
House Speaker Nancy Pelosi said Sunday the chamber would vote Thursday on the bipartisan infrastructure deal, which the Senate passed last month. That would come the same day that lawmakers need to come to an agreement to fund the government to avert a partial shutdown, which would take effect on Friday at 12:01 a.m. ET without congressional action.
The Senate is set to hold a vote Monday on a measure that would extend government funding through early December while also raising the debt limit until the end of next year. This measure, however, is expected to be blocked by Republican lawmakers, who have balked at tying the extension of government funding to raising the debt limit.
"Speaker Pelosi and Senate Schumer announced that they will move forward with legislation that ties an extension of government spending authority to a suspension of the debt limit. Our political economist believes that the likelihood of a government shutdown increases the longer Democrats pursue this course," David Kostin, Goldman Sachs chief U.S. equity strategist, wrote in a note Monday morning. "However, we find no major consistent reaction of the S&P 500 to government shutdowns since 1980."
S&P 500 falls 0.3% to end three-session winning streak; Nasdaq drops 0.5%
Here were the main moves in markets as of 4:05 p.m. ET:
S&P 500 (^GSPC): -12.37 (-0.28%) to 4,443.11
Dow (^DJI): +71.37 (+0.21%) to 34,869.37
Nasdaq (^IXIC): -77.73 (-0.52%) to 14,969.97
Crude (CL=F): +$1.47 (+1.99%) to $75.45 a barrel
Gold (GC=F): -$1.30 (-0.07%) to $1,750.40 per ounce
10-year Treasury (^TNX): +2.4 bps to yield 1.4840%
1:00 p.m. ET: Dow holds onto gains as Dow, Chevron shares outperform
Stocks remained mixed heading into the afternoon session, with the S&P 500 and Nasdaq in the red while the Dow gained.
Shares of materials company Dow Inc. (DOW) and Chevron (CVX) outperformed in the 30-stock index, tracking a more than 2% jump in U.S. crude oil prices as optimism over the economic recovery stoked a rise in energy prices. The energy sector outperformed in the S&P 500 alongside the financials and materials sectors, while the healthcare and information technology sectors lagged.
9:42 a.m. ET: Amazon shares drop 2% after Morgan Stanley slashes price target
Shares of technology heavyweight Amazon (AMZN) sank 2% just after market open, after Morgan Stanley cut the company's price target, citing rising labor cost pressures.
Morgan Stanley's new price target for the e-commerce giant was $4,100, down from the $4,300 the firm expected previously. Still, the updated target suggests additional upside of 19.7% from Friday's closing levels.
Amazon has gone on an aggressive hiring spree over the year-to-date, looking to build on its massive workforce as labor scarcities hit companies across industries and average hourly wages jump. It announced earlier this month it would be hiring another 125,000 warehouse and transportation workers in the U.S., with an average starting wage of $18 per hour. That announcement added to an early plan to bring on another 40,000 workers in corporate roles for the company.
9:31 a.m. ET: Stocks open mixed, S&P 500 and Nasdaq dip
Here's where markets were trading just after the opening bell:
S&P 500 (^GSPC): +53.34 (+1.21%) to 4,448.98
Dow (^DJI): +506.50 (+1.48%) to 34,764.82
Nasdaq (^IXIC): +155.40 (+1.04%) to 15,052.24
Crude (CL=F): +$1.00 (+1.38%) to $73.23 a barrel
Gold (GC=F): -$30.90 (-1.74%) to $1,747.90 per ounce
10-year Treasury (^TNX): +7.4 bps to yield 1.4100%
9:16 a.m. ET: Durable goods orders jumped by the most since May last month, exceeding estimates
Durable goods orders in the U.S. far exceeded estimates in August, suggesting strong underlying trends in the manufacturing sector even as supply chain challenges weighed on growth.
Orders for durable goods, or manufactured products intended to last at least three years, rose 1.8% in August, according to the Commerce Department's preliminary monthly reading. This came following a 0.5% rise in July, which was upwardly revised from a 0.1% dip reported earlier. Consensus economists were looking for August durable goods orders to rise by 0.7%, according to Bloomberg data.
New orders for non-defense aircraft and parts — or the category that comprises commercial aircraft like Boeing jet — surged by nearly 78% during the month, contributing heavily to the headline increase in orders. Excluding transportation orders, durable goods orders were up just 0.2% for August, coming in below the 0.5% rise expected.
Business spending also showed resilience during the month, with non-defense capital goods orders excluding aircraft rising by a better-than-expected 0.5%. This represented a sixth straight monthly gain. And non-defense capital goods shipments, excluding aircraft, rose by 0.7% to top the 0.5% increase expected, with this measure getting factored into calculations of GDP.
7:39 a.m. ET Monday: Stock futures point to a mixed open
Here were the main moves in markets as of Monday morning:
S&P 500 futures (ES=F): -5.5 points (-0.12%), to 4,440.25
Dow futures (YM=F): +59 points (+0.17%), to 34,733.00
Nasdaq futures (NQ=F): -86.75 points (-0.57%) to 15,232.00
Crude (CL=F): +$1.04 (+1.41%) to $75.02 a barrel
Gold (GC=F): -$3.40 (-0.19%) to $1,748.30 per ounce
10-year Treasury (^TNX): +2.4 bps to yield 1.485%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter