Wall Street Near Record High Amid Asia Market Swings

Wall Street/ U.S. stocks/ Asian markets, Nikkei/ China stimulus/ S&P 500, bond yields/ Fed interest rates/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ Wall Street stocks remained close to record levels on Monday despite volatile trading in Asian markets. The S&P 500 was steady after a strong week, while Japan’s Nikkei dropped and Chinese indexes soared. Investors await U.S. jobs data, a key indicator for the economy and Federal Reserve policy.

Wall Street Record Levels Quick Looks:

• U.S. stocks near all-time highs amid global market shifts.
• S&P 500, Dow, and Nasdaq diverge in early trading.
• Japan’s Nikkei 225 drops 4.8% on leadership changes.
• Chinese markets rally after stimulus measures.
• U.S. bond yields rise as investors watch interest rates.

Wall Street Near Record High Amid Asia Market Swings

Deep Look:

Wall Street stocks hovered near record levels on Monday, shrugging off wild movements in Asian markets. The S&P 500 remained nearly unchanged in early trading, following its sixth winning week in seven. The Dow Jones Industrial Average fell 155 points or 0.4%, retreating from its all-time high set last Friday. In contrast, the Nasdaq composite climbed 0.2% as of 9:37 a.m. Eastern time.

This brief pause comes after Wall Street’s recent rally, spurred by optimism that the Federal Reserve’s interest rate cuts could help sustain the slowing U.S. economy. Investors are closely watching Friday’s release of the latest U.S. jobs report, a critical indicator for economic health.

Recession Fears Loom

Despite the Fed’s recent rate cuts, concerns over a potential recession still weigh heavily on the market. The central bank had maintained rates at a 20-year high to curb inflation but has since pivoted to more accommodative policies. Slower hiring by U.S. employers has added to fears that the economy may already be decelerating. The upcoming jobs report could provide crucial insights into the economy’s trajectory, with many economists expecting payroll growth to hit 146,000 for September.

A report from Bank of America strategists noted that payroll figures remain the biggest catalyst for the U.S. stock market, especially leading up to the 2024 election. Goldman Sachs’ economist David Mericle, however, has predicted stronger-than-expected job growth, which could ease recession concerns. In previous months, robust employment figures would have raised inflationary concerns. However, in the current environment, stronger numbers could be welcomed as a signal that the economic slowdown may not be as severe as feared.

Asian Markets: A Mixed Bag

While U.S. investors focus on domestic indicators, financial markets in Asia showed significant turbulence. Japan’s Nikkei 225 plunged 4.8%, amid concerns that incoming Prime Minister Shigeru Ishiba may implement policies that favor higher interest rates. Investors fear these moves could be less favorable for the stock market. Ishiba’s support for the Bank of Japan’s initiative to raise interest rates from near-zero levels would likely strengthen the yen, which in turn could hurt exporters by reducing overseas profits. Shares of Japanese automakers like Toyota Motor and Honda Motor felt the sting, with losses of 7.6% and 7%, respectively.

In contrast, China’s stock markets experienced a dramatic surge. The Shanghai Composite Index jumped 8.1%, marking its best day in nearly 16 years, while the Hong Kong market climbed 2.4%. These gains followed a series of government and central bank interventions aimed at bolstering China’s faltering economy. Notable measures include easing mortgage rates and lifting home purchase restrictions in key cities such as Guangzhou, Shanghai, and Shenzhen. These moves come on the heels of other stimulus efforts, all aimed at supporting the nation’s struggling real estate sector and overall economic growth. The sharp rally came ahead of a week-long market closure in mainland China to commemorate 75 years of communist rule.

European Struggles and Corporate Losses

European stocks weren’t spared from the global turbulence, as many markets posted losses. In particular, automaker Stellantis saw its shares fall 13.7% in Milan after it revised its profit forecast downward. The company cited increased competition from Chinese automakers and higher investment costs as it attempts to revitalize its U.S. operations.

Rising U.S. Bond Yields

In the bond market, U.S. Treasury yields edged higher. The yield on the 10-year Treasury rose to 3.76%, up from 3.75% late Friday. Meanwhile, the two-year Treasury yield, which more directly reflects Federal Reserve policy expectations, climbed to 3.60% from 3.56%.

As markets continue to react to global economic shifts, investors will be closely watching for signs of resilience or further downturns in both domestic and international markets.

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