U.S. stock-market indexes took a pause from a string of record highs on Monday as the S&P 500 and Nasdaq Composite traded slightly lower, with traders weighing the prospects for tax cuts and a mixed bag of earnings results.
What are stock indexes doing?
The major U.S. stock indexes scored all-time closing highs on Friday, marking the 24th time in 2017 that all three main benchmarks simultaneously closed at records.
The S&P 500 index SPX, -0.05% was off by 2 points, or 0.1%, to 2,573, after setting an intraday all-time high in early trade. The Nasdaq Composite Index COMP, -0.14% slipped 20 points, or 0.3%, to 6,608.
The Dow Jones Industrial Average DJIA, +0.06% clung to modest gains, up 17 points, or 0.1%, to 23,345, helped by gains in Home Depot Inc.HD, +1.16%Nike Inc.NKE, +1.32% and Johnson & JohnsonJNJ, +1.22% all up more than 1%.
What’s driving the market?
Tepid trading comes amid lack of news surrounding the prospects for tax cuts. Expectations for a major tax overhaul have been credited with helping spur a rally in U.S. stocks in the wake of Trump’s presidential election win in November.
Read:What’s next for a tax overhaul after the Senate passed its budget
Better-than-expected earnings results, which have been driving markets over the past few weeks, appeared to have taken a back seat on Monday.
See:Tech earnings—the iPhone X, other new gadgets that will matter this holiday season
Earnings from U.S. companies have largely been better than forecasts. About 75% of the S&P 500 companies that have reported so far have beat earnings expectations, according to FactSet data.
What are strategists saying?.
• “It feels like the market is resting after making all-time highs across the board. People are still focused on earnings and are definitely banking on tax cuts,” said Ian Winer, head of the equities division at Wedbush Securities. “But with each day we keep seeing that things that are proposed to offset the cuts are killed and today it was 401(k) plans,” Winer added.
Last week The Wall Street Journal reported that there are proposals about capping the amount that Americans may contribute before taxes to 401(k) plans as a way to generate revenue. However, President Trump tweeted this morning, saying that there will be no changes to 401(k) rules, which he called “a great and popular middle class tax break that works.”
• “Investors are likely [to] continue ignoring overstretched valuations, and keep driving equities higher for the remainder of the year, if they believe fiscal reforms will be implemented soon,” said Hussein Sayed, chief market strategist at FXTM, in a note.
See:Stocks are incredibly overbought—why that’s not as scary as it sounds
What are other assets doing?
The Japanese yen USDJPY, +0.15% fell and the Nikkei 225 index NIK, +1.11% rallied after Prime Minister Shinzo Abe’s coalition easily won a majority in Japan’s snap parliamentary election on Sunday. Abe’s win raises the prospect for continued accommodative monetary policy, which tends to weaken the yen and boost stocks in the country.
Read:Japan’s Nikkei rises for a 15th straight session after Abe’s election win
Other Asian markets closed mixed, while European stocks SXXP, +0.16% mostly were higher.
The dollar rose, continuing higher on the prospect of tax cuts. The ICE Dollar Index DXY, +0.04% was up 0.3% at 93.961. Metals were largely lower, pressured by the stronger greenback.
Oil pricesCLZ7, +0.44% climbed after the Organization of the Petroleum Exporting Countries said over the weekend that production cuts exceeded agreed levels by 20%. The cartel also said “all options are left” for rebalancing the market, seen as reinforcing the view that the output pact will be extended when OPEC meets in November.
Which stocks are in focus?
Shares of VF Corp.VFC, +6.61%jumped 5.8% after raising its guidance.
Shares of disk-drive maker Seagate Technlogy PLCSTX, +12.51% surged 13% after the company handily beat earnings estimates for its fiscal first quarter.
Halliburton Co.HAL, -2.15% shares fell 1.5% even as earnings beat forecasts.
Deltic Timber Corp.DEL, +5.94% rallied 6.5% after the timberland holding company agreed to merge with Potlatch Corp.PCH, +0.38% creating a company with a total enterprise value of $4 billion.
Hasbro Inc.HAS, -9.04% plunged 9.2% after providing a downbeat sales outlook. Rival Mattel, Inc.MAT, -2.76% which is scheduled to report result on Thursday, also fell, trading 3.1% lower.
Cisco Systems Inc. shares CSCO, +1.12% shares were 1% higher after a Bloomberg News report that the company is nearing a deal to buy telecommunications-focused software company BroadSoft Inc.BSFT, +1.58%
What data are traders watching?
The Chicago Fed national activity index for September improved to 0.17 in September from negative 0.37 in August.
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