US open: Soft start for Dow and S&P but Nasdaq in the black
Wall Street trading kicked off with mixed performances on Monday, as the Dow Industrials came under selling pressure even as many investors continued to cheer encouraging jobs data at the end of the previous week.
At 1520 GMT, the Dow Jones Industrials Average and S&P 500 were down 0.56% and 0.17%, respectively, while the Nasdaq had gained 0.17%.
Stocks racked up healthy gains on Friday after the non-farm payrolls report revealed the right combination of better-than-expected jobs growth but weaker-than-forecast wage growth, but with some of the best known names in the Industrials down by more than 1%, the broad-market index was up against some stiff headwinds early in the day.
Connor Campbell, financial analyst at SpreadEx, said that, while the slip was "not that bad", it did show a "slight unwillingness on the part of investors to let the index escape the 24250 to 25500 trading band its found itself for the past month and a half."
Craig Erlam, senior market analyst at Oanda, chipped in saying: "The numbers we saw on Friday provided the perfect balance of strong job creation and softer wage growth which does not necessarily trigger faster rate hikes. The much higher participation rate was a clear reminder that, while unemployment is at a 17-year low, there is still some slack in the economy which may take longer to sort out and explain why wage growth and inflation is so muted.
"This is why we didn’t see the kind of knee-jerk reaction in the markets that we saw a month ago. Policy makers will likely be looking at the data and see it as evidence that slack still remains and no additional tightening is needed as a result of the strong employment gains. Of course, this is just one jobs report and future reports could show stronger wage growth but for now, investors are comfortable with the numbers."
An apparent softening in President Trump's stance on trade tariffs was also providing a boost to sentiment.
"Trump is clearly using these tariffs to force the hand of those allies that he believes are taking advantage of the US. Whether this is the best way to get more cooperation is another matter but investors are becoming more encouraged by his recent acknowledgement that a reduction could be imposed for some countries," Erlam said.
On the corporate front, Dow Chemical was in the black as it announced that long-time chief executive Andrew Liveris is stepping down and Biogen dropped 1.11% after it agreed to buy Pfizer's schizophrenia drug for up to $590m.
Elsewhere, optical components manufacturer Oclaro surged 26.18% after it agreed to be bought by Lumentum Holdings in a deal valued at $1.8bn and Clorox dropped back 0.37% on the announcement that it had agreed to buy privately-held wealth and wellness company Nutranext for $700m.
There were no major US data releases due on Monday but things will pick up over the course of the week, with inflation and retail sales figures due.