U.S. stock market shows mixed result on Monday after last week’s rally

The U.S. stock market displayed a mixed result on Monday after posting its biggest weekly gain in two years the previous week. Analysts said investors had become less optimistic about the Federal Reserve loosening its tight monetary policy.

The Dow Jones closed at 33,773.09, gaining 25.23 points or 0.07 percent. On the other hand, the S&P 500 declined by 5.22 points or 0.13 percent and closed at 3,987.71. The Nasdaq Composite also closed lower at 11,244.74, dropping by 78.59 points or 0.69 percent.

Data showed that the decline within S&P 500 was caused by mega-cap stocks, including Microsoft and Amazon. Although mega-cap stocks strengthened significantly last week, reports said investors remained hesitant about betting their funds on these companies due to their lower profit outlooks.

Contrary to the stock market, government bond yields rose before the Veterans Day holiday. The 10-year notes showed a 6.4 basis points increase to 3.893, while the two-year ones went up by 10.5 basis points to 4.431 percent.

Investors’ sentiment in the stock market worsened over a statement by Fed governor Christopher Waller, who said the central bank was not "softening" its stance on battling inflation. Waller also stressed that although the October consumer price index showed a lower-than-projected inflation rate, it was only one parameter in the Fed’s monetary policy decision.

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Several analysts, including Barings chief global strategist Christopher Smart, previously discussed that the rally in the stock market last week would not be sustainable.

Smart explained that in the next few months, inflationary data would be contradictory, adding that Waller’s comment was an effort to “talk down any market euphoria” about a possible policy pivot.

Spartan Capital Securities chief market economist Peter Cardillo also said that the market was expecting the central bank to maintain its “hawkish rhetoric” on interest rates.

"That could all change once we get more confirmation on inflation in December,” Cardillo said. “Once they (the Fed) raise rates at 50 (bps), there's a possibility that they might indicate slower rates."

Currently, investors in the U.S. are waiting for more inflation data. The producer price index (PPI) is scheduled to be published today, while the index of leading economic indicators will be released on Friday. Several companies are also publishing their earnings reports this week.

Situation in other markets

The European market improved after European Central Bank executive Fabio Panetta hinted that the region’s central bank might take a dovish approach to its monetary policy.

The pan-European STOXX 600 grew by 0.27 percent on Monday. Germany’s two-year bond yield also declined by 1.9 basis points to 2.111 percent. Last week, the two-year bond yield rose to 2.252 percent, its highest position since 2008.

In the fiat market, the dollar index gained 0.15 percent after seeing the biggest weekly drop in more than two years last week. The euro was down 0.21 percent to $1.033, while the sterling weakened by 0.6 percent to $1.1758. The Japanese yen also saw a 0.7 percent fall to 139.74 per dollar.

The crypto industry continued its plunge on Monday, with Bitcoin reaching $16,518 or down by 1.41 percent. During the day, the token plunged below $16,000 for the first time since last Thursday. Analysts said that FTX’s recent collapse continued to affect the crypto market as a whole.