Traders work on the floor of the New York Stock Exchange during morning trading on November 10, 2023 in New York City.
Michael M. Santiago | Getty Images
The S&P 500 ended Monday’s session near the zero line as traders prepared for the release of key inflation data.
The broad market index ended the day down 0.08%, closing at 4,411.55. The Nasdaq Composite finished 0.22% lower, closing at 13,767.74. The Dow Jones Industrial Average rose 0.16%, gaining 54.77 points to close at 34,337.87.
Investors were looking to Tuesday’s October consumer price index release as the next catalyst for markets. According to economists surveyed by Dow Jones, overall inflation is expected to have increased by 3.3% compared to last year. The metric is also forecast to have increased by 0.1% month-on-month.
Moody’s stressed Friday that “very large” U.S. budget deficits and partisan gridlock in Washington were factors that contributed to the cuts. The rating agency confirmed America’s credit rating at AAA, the highest level. This came three months after Fitch downgraded the default rating of long-term U.S. foreign currency issuers to AA+ from AAA, also citing expected deterioration in financial conditions, increasing debt burdens and political stalemate over budget issues.
Treasury yields remained unchanged on Monday despite the negative outlook. The yield on the 10-year Treasury note was last at 4.638%, up about 1 basis point.
“We are seeing investor reaction to the Moody’s downgrade, but we are also seeing unrest around some key developments coming up this week. We believe all eyes are on this week’s inflation data and resulting Fed policy,” said Greg Bassuk, CEO of AXS Investments.
With this in mind, Bassuk expects market volatility to continue through the end of the year, especially given the ongoing wars overseas. Combined with mixed economic data, “this has led to the Grinch fueling the Christmas rally this year.”