Fundamental Analysis

Wall St Weighed Down By Inflation Jitters

Wall Street’s main indexes slipped on Monday after a sharp recovery late last week, as signs of inflationary pressures building up in the economy kept investors worried about monetary policy tightening.

Shares of Discovery Inc (DISCA.O) jumped 7% on plans to merge with U.S. telecoms giant AT&T Inc’s (T.N) media assets, including CNN and HBO. AT&T shares gained 3.8%.

The S&P 500 saw its biggest one-day jump in more than a month on Friday as investors picked up beaten-down stocks following a pullback earlier in the week on concerns around inflation and a sooner-than-expected tightening by the U.S. Federal Reserve.

In a relatively quiet week for economic data, minutes on Wednesday from the Fed’s policy meeting last month could shed more light on the policymakers’ outlook of an economic rebound.

“The conversation around inflation is really the focus of the market and everyone’s trying to get a picture on whether the Fed is right in saying if this is all temporary or is this something they need to take more seriously,” said Greg Swenson, founding partner of Brigg Macadam.

“You’ll continue to see rotation (out of technology stocks) not only because of the outperformance of tech in the last year versus cyclicals, but the only way you can stay long equities and hedge against inflation is own more cyclicals – bank, energy.”

The Russell 1000 value index (.RLV), which includes energy and bank stocks, continued to outperform on Monday, taking its year-to-date gains to 17.3%, versus its tech-laden growth counterpart’s (.RLG) rise of about 4%.

At 9:44 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 68.67 points, or 0.20%, at 34,313.46, the S&P 500 (.SPX) was down 9.19 points, or 0.22%, at 4,164.66, and the Nasdaq Composite (.IXIC) was down 48.45 points, or 0.36%, at 13,381.52.

Four of the 11 major S&P sectors declined, with technology (.SPLRCT) leading losses.

Earnings this week will be scrutinized for clues on whether rising prices had any impact on consumer demand and if retailers could sustain their strong earnings momentum.

Walmart Inc (WMT.N), home improvement chain Home Depot Inc (HD.N) and department store operator Macy’s (M.N) are set to report on Tuesday, with Target Corp (TGT.N) Ralph Lauren (RL.N) and TJX Cos (TJX.N) on tap later in the week.

With the earnings season at its tail-end, overall earnings for S&P 500 companies are expected to have climbed 50.6% from a year ago, according to Refinitiv IBES, the strongest pace of growth in 11 years.

ViacomCBS shares (VIAC.O) gained 3.5% after a report that billionaire George Soros’s investment firm bought stocks as they were being sold off during the meltdown of Archegos Capital Management.

Cryptocurrency-related stocks like Marathon Digital (MARA.O), Riot Blockchain (RIOT.O) and Coinbase (COIN.O) fell between 6% and 9% as bitcoin swung in volatile trading after Tesla (TSLA.O) boss Elon Musk’s tweets about the carmaker’s bitcoin holdings.

Declining issues outnumbered advancers for a 1.27-to-1 ratio on the NYSE and for a 1.27-to-1 ratio on the Nasdaq.

The S&P index recorded 24 new 52-week highs and no new low, while the Nasdaq recorded 44 new highs and 19 new lows.

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Vladimir Ribakov

Following 11+ years of trading experience, trading my own accounts as well as for hedge funds and brokerages, I have decided to fulfill my destiny and to personally mentor Forex and Commodities traders. When I released the “Broker Nightmare” (software that hides trades from brokers) 8 years ago, I found an overwhelming number of frustrated people who genuinely wanted to learn how to trade the Forex market, but instead found themselves scammed and misled. Over the years I have also release other trading systems based on my trading strategies, and met a lot of people on my worldwide Forex seminars. We’ve formed a close Forex community and we meet once or twice a year in various locations in Europe.

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