Market Snapshot: U.S. stock indexes’ opening gains fizzle despite strong durables data

by | Jun 27, 2022 | Stock Market

U.S. stocks struggled for direction Monday afternoon, losing their opening gains, as investors weighed stronger-than-expected data on durable-goods orders against expectations for a slowing economy that could limit the magnitude of Federal Reserve rate increases.What’s happening
The Dow Jones Industrial Average
DJIA,
-0.36%
was down 66 points, or 0.2%, at 31,435.

The S&P 500
SPX,
-0.45%
shed 10 points, or 0.3%, at 3,901.

The Nasdaq Composite
COMP,
-0.79%
was down 71 points, or 0.6%, at 11,537.

Last week, the S&P 500 jumped 6% to snap a three-week losing run. The Dow Jones Industrial Average rose 5% and the tech-heavy Nasdaq Composite gained 7%.

What’s driving markets Stocks struggled to hang on to opening gains even after data showed U.S. durable-goods orders rose by 0.7% in May, versus forecasts for a 0.2% rise, and pending home sales rebounded last month, reversing a six-month decline. Investors were caught between recession and inflation fears. “We’re going to be dealing with this push and pull for sometime to come now,” Dan Eye, chief investment officer at Fort Pitt Capital Group, said via phone. “I don’t think we can expect to see a situation where inflation comes down significantly without a pretty significant slowdown in economic growth.” Stocks had bounced last week in a move analysts credited to expectations a slowing economy could see the Federal Reserve hike rates less aggressively than previously expected. Fed Chairman Jerome Powell warned lawmakers that achieving a so-called soft landing for the economy as the Fed tightens interest rates would be “very challenging.”JPMorgan quantitative strategist Marko Kolanovic published a note saying the market could rise 7% this week, due to the need for portfolios to rebalance as the month, quarter and first-half closes. That effect already played out near the end of the first quarter, and near the end of May. “The S&P 500 is nearly 8% up from its lows at the start of the month and rallied 3% on Friday,” according to analysts at ING, in a Monday note. “Helping the rally has no doubt been last week’s repricing of tightening cycles around the world where 25-50 basis points of expected tightening were removed from some money market curves in just a few days. Driving that pricing seemed to be the much broader discussion — including from Federal Reserve Chair Jerome Powell — over the risks of recession.” Strategists at Credit Suisse say bond yields may have seen their peak, particularly for Treasury-inflation protected securities, which in turn …

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