Stocks Wobble to Start the Week, Bitcoin Slides Under $33,000

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Principal Points

• Wall Street stocks finish in mixed territory on Monday, investors eye inflation data
• Cryptocurrency market drops further, Bitcoin extends Monday’s losses, falls below $33,000

Equities on Wall Street drifted on Monday as traders and investors are wary of the forthcoming inflation report on Thursday. Main US benchmarks ended mixed on Monday with the Dow Jones and the S&P500 turning negative in a late-hour sell-off.

After closing near a record on Friday, the Dow Jones Industrial Average pushed higher during the session yesterday, briefly trading into a new all-time high before investors lost the momentum and the 30-stock index dipped, closing in the red. The Dow lost 126.15 points, or 0.36%, to end Monday’s trading at 34,630.24. The broad-based S&P500, the dominant equity gauge in the US, recorded a loss as it slid just under the flatline, ending 3.37 points lower, or 0.08%, to 4,226.52. The technology-focused Nasdaq Composite ticked up 67.23 points, or 0.49%, closing at 13,881.72.

Wall Street benchmark indexes have recently been trading muted as investors expect to see where the economy is going. Market participants were encouraged by the latest jobs report published on Friday. The Labor Department revealed May’s jobs report stood at 559,000 new jobs created, indicating the economic recovery remains on track. Investors, however, assess a range of other factors, including the inflation outlook and the high valuations of stocks, particularly in technology.

Inflation Remains in the Spotlight

While inflation worries have eased in the past weeks, the market is still nervous about whether the Federal Reserve will be prompted to scale back its monetary support if the higher inflation rate extends into May. A hefty gain in the inflation index for May could force the central bank led by Jerome Powell to pull back some of the easy-money policies that have buoyed stocks and aided the economic recovery for over a year.

Inflation in April jumped to 4.2%, according to the consumer price index, a key indicator of price changes and inflation. Economists surveyed by Bloomberg expect this week’s data to show consumer price spiked 4.7% in May from the same month a year ago. The Federal Reserve, which is set to meet next week, has reiterated strong inflation is transitory and is a result of the economic reopening. In addition, the central bank has said it expects higher prices to come back to the 2% target as soon as next year.

In individual stocks, another hyperactive session in so-called meme stocks pushed AMC 14% higher, while the software group BlackBerry advanced roughly 13%. GameStop also marked an increase of nearly 13% on Monday.

On the cryptocurrency front, Bitcoin slipped more than 7% from its session high to the closing price yesterday as crypto traders have not yet been able to stage a solid recovery after the May crash wiped off more than $500bn in what is now called the Black Wednesday in the crypto market. Bitcoin finished Monday’s session at about $34,400.

Wall Street futures on Tuesday are showing mixed numbers. Dow futures are slightly negative, while S&P futures and Nasdaq futures are in the green in pre-market hours. Bitcoin remains negative, extending yesterday’s decline. The crypto asset is currently trading a little under $33,000.