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Market Snapshot: S&P 500 pops into positive territory as investors shake off weak China data to buy energy, tech stocks

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U.S. stock benchmarks trimmed early losses to trade flat to slightly higher at midday Monday, with buying in energy and information technology helping to buttress the broader market, despite a report that revealed slower-than-forecast growth in China that was blamed for early weakness.

How are stock benchmarks trading?
  • The Dow Jones Industrial Average
    DJIA,
    -0.13%

    slipped 14 points, or less than 0.1%, to 35,282, off an intraday low at 35,035.94, FactSet data show.
  • The S&P 500
    SPX,
    +0.23%

    rose 10 points, or 0.2%, to reach 4,482, after slipping to a Monday low at 4,447.47.
  • The Nasdaq Composite Index
    COMP,
    +0.60%

    gained 70 points, or 0.5%, to 14,968.

On Friday, after the release of stronger-than-forecast retail sales figures, the Dow Jones Industrial Average rose 382 points, or 1.1%, to 35,295, the S&P 500 increased 33 points, or 0.8%, to 4,471, and the Nasdaq Composite gained 74 points, or 0.5%, to 14,897.

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What’s driving the market?

Buying in energy
XLE,
+0.44%
,
consumer discretionary
SP500.25,
+0.83%
,
and technology shares
XLK,
+0.63%

gave the broader market a bit of a boost, as investors attempted to shake off an earlier dour mood on Wall Street that had been partly prompted by concerns about the economic health of the world’s second-largest economy as energy prices surge.

China reported 4.9% year-over-year growth in the third quarter, a big slowdown from the 7.9% recorded in the second quarter, as construction output slowed.

Hand-wringing about stuttering global growth and surging inflation, as crude-oil futures
CLX21,
-0.29%

touched multiyear highs before retreating on the day, has helped to check the bulls somewhat. Concerns about inflation also were on display across the pond, before trickling over into U.S. markets.

U.K. bond yields
TMBMKGB-02Y,
0.723%

rose after Bank of England Gov. Andrew Bailey said the central bank would have to act to quell inflation, raising the prospect of rate increases in the country. U.S. central bank officials haven’t been as alarmed by the rise in prices.

A stunning rally in energy prices has been cited as further reason to cast doubt on the prospect for strong global growth in the wake of the COVID-19 pandemic, with analysts concerned that the U.S. could be stunted.

“An astonishing increase in the price of energy has seen European natural gas prices rise almost fivefold since the start of the year, fueling inflationary fears and concerns about a global slowdown,” wrote Seema Shah, chief strategist at Principal Global Investors, in emailed comments.

However, the strategist said that the U.S. may be more insulated from the effects of that crisis, which she said could fuel outperformance by U.S. markets.

“For its part, however, the U.S. is in a relatively good position to weather the shock. It’s energy self-sufficient, and consumers have significant excess savings to absorb higher prices. In contrast, as a large net importer of energy, Europe is more exposed,” Shah wrote.

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The moves in stocks come against the backdrop of third-quarter earnings season, which kicks into higher gear this week with releases from Netflix
NFLX,
+1.12%
,
Tesla
TSLA,
+3.16%
,
and International Business Machines
IBM,
-1.43%
,
among others.

“People are focused on economic and earnings fundamentals, which remain strong,” said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company in Milwaukee. “The reality is consumers have a lot of cash to deploy and corporations remain in a good spot.

“Inflation is still the biggest wild card, but to me the way to position for an inflationary environment is in equity markets, not bond markets, especially if the Fed is going to be patient about raising rates,” Schutte said via phone.

In economic reports, a reading of U.S. industrial output was down 1.3% in September. The reading for August was revised lower to a decline of 0.1% from a gain of 0.4%.

The National Association of Home Builders said its monthly confidence index increased four points to a reading of 80 in October — the highest reading since July.

Which companies are in focus?
  • Zillow Group IncZ is pausing the purchase of U.S. homes as it works through a backlog of properties, Bloomberg News reported Sunday. Shares fell 9%.
  • Square Inc. SQ is contemplating building a system for bitcoin BTCUSD mining, according to Chief Executive Jack Dorsey. The payment platform’s shares were up 0.5%.
  • Walmart Inc. WMT announced the return of its “Black Friday Deals for Days” event, taking place during the month of November. Shares were 0.7% higher.
  • Amazon.com Inc. AMZN said Monday that it’s looking for 150,000 seasonal hires, both full- and part-time. Its stock was up 0.2%.
How are other assets trading
  • The 10-year Treasury yield TMUBMUSD10Y rose 2 basis points to around 1.60%. Yields and debt prices move in opposite directions.
  • Oil fell, with the U.S. benchmark CL00 down 0.2% at around $81.57 a barrel. Gold futures GC00 traded lower by 0.1% at around $1,766.70 an ounce.
  • The Stoxx Europe 600 SXXP was down 0.8%, while London’s FTSE 100 UKX retreated 0.4%.
  • The Shanghai Composite SHCOMP closed 0.1% lower, and Japan’s Nikkei 225 NIK declined 0.2%.

Steve Goldstein contributed to this report.

Market Snapshot: S&P 500 pops into positive territory as investors shake off weak China data to buy energy, tech stocks

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