Highlights
Stocks retreated on Monday on consolidative pressures after a run of gains. Investors awaited tariff news and eyed the Federal Reserve policy meeting this week.
The Dow Jones industrial average eased 0.2 percent, the S&P 500 fell 0.6 percent, and the Nasdaq lost 0.7 percent. Bond yields rose after stronger than expected US services purchasing managers report. The dollar and oil prices slipped.
Equity risk appetite suffered from rising bond yields after the Institute for Supply Management's services index topped expectations to show stronger growth with rising cost pressures for April. On the positive side Monday were declining oil prices in response to news that OPEC and its partners had agreed to expand supplies. Stocks appeared overdue to pull back after a remarkable nine-day run of gains for the S&P 500 index, which has been powered by hopes for a breakthrough on trade negotiations.
Meanwhile, the absence of actual news on trade agreements appeared to weigh on stocks, as did President Trump's new threat to impose 100 percent tariffs on movies imported from abroad. That threat hurt shares of Netflix, among others, as Netflix makes many of its productions outside of the US. That suggests Netflix productions filmed abroad would be subject to tariffs, which would raise Netflix costs meaningfully.
The threat to impose tariffs on imported movies spooked some investors as Trump's tariffs have been imposed so far only on physical goods, and this potentially represents a significant widening in prospective tariff targets. The US is a champion in exporting services for now. Observers have been dreading the notion that US trading partners will be given an additional excuse to limit US sales of services abroad in addition to retaliation for US import taxes on foreign goods.
The Dow Jones industrial average eased 0.2 percent, the S&P 500 fell 0.6 percent, and the Nasdaq lost 0.7 percent. Bond yields rose after stronger than expected US services purchasing managers report. The dollar and oil prices slipped.
Equity risk appetite suffered from rising bond yields after the Institute for Supply Management's services index topped expectations to show stronger growth with rising cost pressures for April. On the positive side Monday were declining oil prices in response to news that OPEC and its partners had agreed to expand supplies. Stocks appeared overdue to pull back after a remarkable nine-day run of gains for the S&P 500 index, which has been powered by hopes for a breakthrough on trade negotiations.
Meanwhile, the absence of actual news on trade agreements appeared to weigh on stocks, as did President Trump's new threat to impose 100 percent tariffs on movies imported from abroad. That threat hurt shares of Netflix, among others, as Netflix makes many of its productions outside of the US. That suggests Netflix productions filmed abroad would be subject to tariffs, which would raise Netflix costs meaningfully.
The threat to impose tariffs on imported movies spooked some investors as Trump's tariffs have been imposed so far only on physical goods, and this potentially represents a significant widening in prospective tariff targets. The US is a champion in exporting services for now. Observers have been dreading the notion that US trading partners will be given an additional excuse to limit US sales of services abroad in addition to retaliation for US import taxes on foreign goods.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
