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U.S. Stocks Turning In Lackluster Performance After Early Uptick

After moving modestly higher earlier in the session, stocks have shown a lack of direction over the course of the trading day on Monday. The major averages have been bouncing back and forth across the unchanged line after posting strong gains last week.

Currently, the major averages are narrowly mixed. While the Nasdaq is up 32.27 points or 0.2 percent at 16,373.14, the S&P 500 is down 4.73 points or 0.1 percent at 5,217.95 and the Dow is down 80.51 points or 0.2 percent at 39,432.33.

The early strength on Wall Street came as stocks continued to benefit from recent upward momentum, which has led to an eight-day winning streak for the Dow.

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Renewed optimism about an interest rate cut by Federal Reserve in the coming months has contributed to the recent strength.

Buying interest has waned over the course of the session, however, as key inflation data due this week could have a significant impact on the outlook for rates.

The Labor Department is scheduled to release its reports on producer and consumer price inflation on Tuesday and Wednesday, respectively.

Economists expect producer prices to rise by 0.3 percent in April after edging up by 0.2 percent in March, while the annual rate of growth is expected to tick up to 2.2 percent from 2.1 percent.

Consumer prices are expected to climb by 0.4 percent in April, matching the increase seen in March. Core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in April after climbing by 0.4 percent in March.

The annual rate of consumer price growth is expected to dip to 3.4 percent in April from 3.4 percent in March, while the annual rate of core consumer price growth is expected to slow to 3.6 percent from 3.8 percent.

Remarks by Fed Chair Jerome Powell may also attract attention this week along with reports on retail sales, industrial production and housing starts.

Among individual stocks, shares of GameStop (GME) are soaring after social media persona “Roaring Kitty,” whose posts helped spark a frenzy of activity in the video game retailer’s stock in 2021, posted on X for the first time in three years.

Website building and hosting company Squarespace (SQSP) has also surged after entering into a definitive agreement to go private in an all-cash transaction valued at approximately $6.9 billion.

Sector News

Airline stocks continue to turn in some of the market’s best performances on the day, with the NYSE Arca Airline Index surging by 2.6 percent.

American Airlines (AAL) and United Airlines (UAL) are posting notable gains after HSBC initiated coverage of the stocks with Buy ratings.

Notable strength also remains visible among biotechnology stocks, with the NYSE Arca Biotechnology Index climbing by 1.1 percent. The index reached its best intraday level in a month earlier in the session.

Shares of Incyte (INCY) have spiked by 7.5 percent after the biotechnology company announced its Board of Directors approved a share repurchase authorization of $2.0 billion.

Meanwhile, gold stocks have come under pressure over the course of the session, dragging the NYSE Arca Gold Bugs Index down by 1.1 percent. The weakness in the sector comes amid a steep drop by the price of gold.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday. Japan’s Nikkei 225 Index edged down by 0.1 percent and China’s Shanghai Composite Index slipped by 0.2 percent, while Hong Kong’s Hang Seng Index advanced by 0.8 percent.

Meanwhile, the major European markets all moved modestly lower on the day. While the French CAC 40 Index slipped by 0.1 percent, the German DAX Index and the U.K.’s FTSE 100 Index both dipped by 0.2 percent.

In the bond market, treasuries have rebounded following the pullback seen last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.9 basis points at 4.475 percent.

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