U.S. stocks retreated Monday, during the penultimate session of what has shaped up to be a powerful year of returns for equity indexes, supported in the final three months by optimism over a partial trade pact.
How are the major benchmarks faring?
The Dow Jones Industrial Average DJIA, -0.52% fell 180 points, or 0.6%, to 28,466, while the S&P 500 index SPX, -0.49% slipped 20 points, or 0.6%, to 3,220. The Nasdaq Composite Index COMP, -0.65% retreated 78 points, or 0.9%, at 8,929.
If they hold, the declines would mark the sharpest for the major three stock indexes since Dec. 3, according to FactSet data.
The Dow and S&P 500 each closed at records on Friday. The Dow eked out a gain of 23.87 points, or 0.1%, to end at 28,645.26, while the S&P 500 crept higher by 0.11 point to end at 3,240.02. The Nasdaq gave up 15.77 points Friday to end at 9,006.62, a loss of 0.2%. All three major indexes scored gains for the holiday-shortened week, with the Dow rising 0.7%, the S&P 500 advancing 0.6% and the Nasdaq Composite up 0.9%.
That has left the Dow on track for a 2019 gain of 22.8%, while the S&P 500 is up 29.3% so far this year. The Nasdaq Composite has gained 35.7% in the year to date.
See: Here’s how the Dow and S&P 500 perform in years after they ring up gains of 20%
What’s driving the market?
U.S. equities were pulling back Monday, as investors reassessed the market amid a roughly 3% rise for the S&P 500 in December and a more than 29% gain year-to-date, as of Fridays close. There appeared to be no clear catalyst for the retracement, as news on an easing of U.S.-China trade tensions continued to trickle in.
Chinese Vice-Premier Liu He is set to travel to Washington Saturday, where he is expected to sign the limited trade deal agreed to earlier this month with the Trump administration, the South China Morning Post reported Monday. The deal will reportedly roll back some tariffs on Chinese imports and involve commitments to purchase more U.S. agricultural goods, while increasing market access for U.S. firms.
“The market is taking some time to catch its breath,” John Conlon, senior portfolio manager and director of equity strategy at People’s United Advisors, told MarketWatch. “We’ve been setting records for several days, so it seems like a good time to take some money off the table and reassess what’s going on,” he said.
Meanwhile, trading conditions remain thin in another holiday-shortened week, with markets in the U.S. and much of the world set to be closed on Wednesday for the New Year’s Day holiday. Low volume could be contributing to sharpness of losses for stocks, Conlon said.
Global financial markets showed little lasting reaction to U.S. military strikes in Iraq and Syria over the weekend. U.S. forces conducted “precision defensive strikes” against five sites controlled by Kataeb Hezbollah, or Hezbollah Brigades, an Iran-backed Iraqi militia, a Defense Department spokesman said Sunday. The U.S. has blamed the militia for a rocket barrage on Friday that killed a U.S. defense contractor at a military compound near Kirkuk, in northern Iraq.
In economic news, the November trade deficit fell to a more than 27-month low, down 5.4%, though 2019 is on track for the largest annual deficit in 11 years.
A reading of the Chicago-area purchasing managers index for December showed a climb to 48.9 from 46.3. A reading of above 50 indicates improving conditions.
Contracts to buy previously owned U.S. homes rose in November, according to the National Association of Realtors. Its pending home sales index rose. 12% to 108.5.
What stocks are in focus?
Tesla Inc. TSLA, -3.64% shares were down 4% Monday after Cowen analyst Jeffrey Osborne said he expects the electric-car company to report fewer car deliveries than it had previously predicted for 2019.
Shares of Myriad Genetics Inc. MYGN, -0.21% fell 2.6% after the diagnostics company said its BRACAnalysis CDx product was approved by the Food and Drug Administration.
Facebook Inc. FB, -1.52% shares could be in focus after Salesforce.com CRM, -1.10% founder and co-chief executive sharply criticized the company during a Sunday interview with CNN. He said Facebook was a culprit of society’s “crisis of trust” as a result of their unwillingness to truth in political advertisements, and that “Facebook is the new cigarettes for our society. It is something that badly needs to be regulated.” Facebook shares were down 1.7% Monday.
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, +2.52% rose 6.1 basis points to 1.927%, after slumping to its lowest level in three weeks Friday.
Oil prices were edging higher, with the price of a barrel of West Texas Intermediate crude oil for February delivery CLG20, +0.45% up 25 cents, or 0.1%, to $61.79 on the New York Mercantile Exchange. Gold was edging lower, meanwhile, as the price of an ounce of gold for December delivery GCG20, +0.00% lost $1.60 to $1516.50 on Comex.
The value of the U.S. dollar ticked 0.2% lower, as gauged by the ICE U.S. Dollar index DXY, -0.27%.
In Europe, stocks were trading mostly lower, as reflected by the Stoxx Europe 600 SXXP, -0.76% losing 0.8%.
In Asia overnight, shares traded mixed, with the China CSI 300 000300, +1.48% rising 1.6%, Hong Kong’s Hang Seng Index HSI, +0.33% gaining 0.3%, while Japan’s Nikkei 225 NIK, -0.76% fell 0.8%.