Gains in U.S. stocks lost steam, with the three major indices ending mixed by the close of Monday’s session.
While the S&P 500 ended the session slightly lower, the energy sector outperformed, with domestic crude oil prices rising more than 2% after newly minted Saudi energy minister Prince Abdulaziz bin Salman confirmed that OPEC and its allies would continue with oil output cuts.
Here were the main moves in the market by the end of regular equity trading:
S&P 500 (^GSPC): -0.01%, or 0.28 points
Dow (^DJI): +0.14%, or 38.05 points
Nasdaq (^IXIC): -0.19%, or 15.64 points
10-year Treasury yield (^TNX): +8.2 bps to 1.632%
Crude oil (CL=F): +2.4% to $57.85 per barrel
Gold (GC=F): -0.44% to $1,508.80 per ounce
U.S.-China trade also remained top of mind, as investors earlier in the day digested commentary from U.S. Treasury Secretary Steven Mnuchin on Fox Business Network asserting that the U.S. and China had made “a lot of progress” in trade discussions.
And with a lack of major economic data and corporate earnings results coming from the U.S. at the start of the week, market participants instead parsed through the latest set of overseas data. Some stronger-than-expected economic data results from the U.K. and Germany also helped encourage investors to turn to risk assets early during Monday’s session.
The U.K. economy expanded at a rate of 0.3% between June and July, according to the Office of National Statistics (ONS). This exceeded expectations of just a 0.1% monthly gain, from 0% in June, with results driven by strength in the services sector. The return to growth in July – the first month of the third quarter – suggested the country would dodge a recession, which is defined as two consecutive quarters of contraction. The U.K. economy had contracted by 0.2% in the second quarter of 2019.
In Germany, stronger-than-expected export data from July provided a brief respite after months of weak data from the eurozone’s largest economy. Exports rose 0.7% month-over-month in July, on a seasonally adjusted basis, the Federal Statistical office reported, while a decline of 0.5% had been expected, according to Bloomberg-compiled expectations. However, many market pundits pointed out that ongoing trade disputes and Brexit uncertainty continue to threaten the export-reliant German economy.
These ongoing threats have led consensus economists to continue to expect that the European Central Bank (ECB) will deploy further stimulus following its policy meeting Thursday. ECB President Mario Draghi earlier in the summer had said he was considering deploying stimulus measures to help boost the eurozone economy amid anemic growth and low inflation. Plus, the ECB had said in its latest policy statement that it expected to keep key interest rates at “their present or lower levels” at least through the first half of 2020. Consensus economists polled by Bloomberg expect a 10 basis point cut to the ECB deposit facility rate at the close of Thursday’s meeting, bringing this down to -0.500%.
Such a move by the ECB would parallel the global monetary policy easing and stimulus measures recently unleashed by central bank around the world.
On Friday, China’s central bank cut its reserve requirements for a seventh time since the start of 2018, reducing the level of reserves banks are mandated to hold and thereby freeing up funds for lending. On the heels of this decision, Chinese exports were shown to have unexpectedly declined in August, underscoring the hit taken by the world’s second largest economy amid ongoing trade disputes with the U.S. Chinese exports to the U.S. fell 16% over last year in August, after declining 6.5% in July.
Meanwhile, U.S. Federal Reserve is widely expected to cut benchmark interest rates by a quarter percentage point at its own meeting, marking a second consecutive rate cut after the Fed’s July meeting. Fed officials this week have entered a pre-meeting blackout period and will not deliver public remarks.
STOCKS: AT&T surges after activist investor discloses major stake
Shares of AT&T (T) jumped more than 7% in early trading Monday, before paring some gains by market close, after activist hedge fund Elliott Management disclosed a multi-billion-dollar stake in the telecommunications giant and said it believed the stock could double by the end of 2021.
Elliott Management said it owns $3.2 billion worth of AT&T’s stock, and has a price target of $60 per share for AT&T, it said in a letter to the board. While the hedge fund said it believed AT&T has underperformed over the last decade due in part to a series of questionable M&A deals and integrations, it added that the company could “unlock significant value” by working to improve its management and operations, and is currently trading at a level that is “historically cheap.”
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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