Wall Street slips, giving back some of last week’s big gains

NEW YORK — Stocks fell on Wall Street on Monday, giving back some of their huge gains made last week on hopes that the worst of national inflation was finally over.

The S&P 500 fell 0.9%, or 35.68 points, to 3,957.25 after swinging between gains and losses several times during the day. The Dow Jones Industrial Average fell 0.6%, or 211.16, to 33,536.70, and the Nasdaq composite fell 1.1%, or 127.11, to 11,196.22.

The losses follow Wall Street’s best week since June, when the S&P 500 jumped 5.9% after encouraging inflation data sparked speculation that the Federal Reserve could ease its shooting of rate hikes. interest rates to control prices. Such rate hikes raised fears of a possible recession, while driving down the prices of stocks, bonds and cryptocurrencies.

Some analysts have called Wall Street’s recent rally overdone, including a 5.5% rise for the S&P 500 on Thursday alone, saying a report doesn’t mean the coast is clear, although it was encouraging. Some Federal Reserve officials also urged caution, with Fed Governor Christopher Waller saying the better-than-expected inflation reading for October “was just one data point” and that “everything the world should just take a deep breath.”

Such warnings weighed on stocks on Monday, as did a rise in Treasury yields. But the market also received a brief boost after Fed Vice Chairman Lael Brainard made comments that investors took as a hint that the largest of the Fed’s rate hikes may have passed. .

“The inflation data was reassuring, initially,” she said. “It will probably be appropriate, soon, to switch to a slower pace of rate hikes.”

At each of its last four meetings, the Fed has raised its key interest rate by 0.75 percentage points, triple the usual amount. Bets have risen since last week’s inflation report that the Fed’s next move will be a hike of just 0.50 percentage points. Although this is still a strong increase relative to history, investors are hungry for any indication that the Fed might ease its rate hikes.

Even before last week’s inflation report, Fed Chairman Jerome Powell had already said such a reduction in the magnitude of rate hikes could be imminent. But he also said the Fed may still eventually take higher than expected rates and may keep rates that high for a while to ensure inflation stays in check.

Fed officials reiterated how long the Fed’s campaign against high inflation still seems.

“Stop paying attention to the beat and start paying attention to where the end point is going to be,” Waller said. “Until we reduce inflation, that end point is still a long way off.”

On Wall Street, Hasbro tumbled 9.9% for the biggest S&P 500 loss. Analysts in a BofA Global Research report raised concerns that the company might overproduce cards for its game “Magic: The Gathering”, threatening to undermine a lucrative business.

On the gain side, Moderna climbed 4.6% after reporting encouraging data on its bivalent vaccine targeting COVID-19.

Bond yields have risen. The 10-year Treasury yield, which helps set mortgage rates, rose to 3.87% from 3.81% Thursday night. Bond markets were closed Friday for Veterans Day.

Crypto-related stocks continued to soar after the implosion last week of FTX, a major crypto trading exchange. Coinbase, another crypto exchange, fell 7.4%.

Several economic reports due this week could offer more clues about the direction of inflation.

On Tuesday, the government will publish its October report on wholesale prices. Economists say inflation likely slowed to 8.3% from September’s 8.5% rate for year-over-year price changes.

Markets will see just how resilient U.S. households have been in their spending on Wednesday when the government releases its latest monthly retail sales update.

Economists say retail sales likely rose 0.9% in October from the previous month, a much better performance than September’s flat performance. The data, however, does not take inflation into account and may reflect nothing more than higher prices charged to the registry.

Retailers could offer more color on this, with a long line of them due to say this week how much profit they made over the summer.

Home Depot and Walmart release their results on Tuesday. Target reports results Wednesday and Macy’s reports results Thursday.