Equities opened the week on the upswing as investors shrugged off the possibility of a Federal Reserve taper in the near future. The Russell 2000 Index gained 1.87 percent, strongest among the major indexes, while the NASDAQ gained 1.55 percent. Dow Jones Industrial Average increased 0.61 percent and the S&P 500 returned 0.85 percent.
SPDR Energy (XLE) climbed 3.75 percent, boosted by a 5.28 percent rise in crude oil. This came despite an announcement that the U.S. will sell 20 million barrels of its Strategic Petroleum Reserve. SPDR Consumer Discretionary (XLY) returned 1.30 percent and SPDR Technology (XLK) 1.28 percent.
The flash manufacturing and services PMIs slowed in August, likely driven by widening lockdown policies overseas, particularly in China.
Existing home sales hit an annualized pace of 5.99 million in July, better than expected.
On Wednesday, the Bureau of Economic Analysis will release its second estimate of second-quarter GDP growth. Economists predict a 0.1 percentage-point increase to 6.6 percent growth. Friday brings the University of Michigan’s consumer sentiment index.
The U.S. Dollar Index dipped 0.56 percent on Monday as the taper talk faded. In the longer-term, less central bank intervention is generally viewed as bullish for a currency. Six months into the Federal Reserve’s prior tapering in 2014, a major U.S. dollar bull market broke out. iShares MSCI Emerging Markets (EEM) rebounded 1.49 percent on Monday, while iShares MSCI EAFE added 0.93 percent.
Interest rates dipped slightly on Monday, while credit risk fell. High yield bonds outperformed, with iShares iBoxx High Yield Corporate Bond (HYG) climbing 0.33 percent. Invesco Senior Loan (BKLN) returned 0.18 percent.