Stocks churn near all-time highs; treasuries fall

U.S. stocks pared back early gains to trade flat after a torrid stretch of advances that lifted benchmark indexes nearly 10 per cent since September.

U.S. stocks pared back early gains to trade flat after a torrid stretch of advances that lifted benchmark indexes nearly 10 per cent since September.

The S&P 500 was little changed on Monday with gains in energy and losses in utilities after closing at a record high on Friday. Meanwhile, the Nasdaq 100 was lower on Tesla Inc.’s 2.8 per cent slump after Elon Musk asked his Twitter followers if he should sell 10 per cent of his stake, and they said yes.

The news flow last week, which also included passage of a US$550 billion infrastructure bill, washed away worries that high inflation and the Federal Reserve’s plan to curb bond purchases would upend growth. Results of Pfizer Inc.’s virus treatment and the lifting of U.S. travel restrictions also boosted speculation companies will continue to have strong earnings. However, the pace of the latest gains may make it difficult for stocks to push any higher without an additional catalyst.

“Fear over inflation and supply chain headwinds have been replaced by fear of missing out in the record-high rally,” said Craig Johnson, Piper Sandler chief market technician, in a note. “Robust demand and economic momentum continue to drive earnings growth. Coronavirus concerns have also dissipated amid vaccine developments and widespread inoculation rates.” 

Markets will closely watch a measure of U.S. consumer prices on Wednesday after gains in U.S. payrolls last week also showed a jump in average hourly earnings. The reading is expected to show price pressures running at the hottest pace in three decades amid supply-chain bottlenecks and higher energy, according to Bloomberg Intelligence.