S&P 500 falls Monday, Wall Street chokes after its best week since June

The S&P 500 traded lower on Monday after posting its biggest weekly gain in nearly five months on the back of easing inflation data.

The broader market index fell 0.3%, while the Nasdaq composite fell 1%. The Dow Jones industrial average advanced 24 points, or 0.1%.

The S&P 500 rallied 5.9% last week, its best week since June. Investors cheered lighter-than-expected inflation, betting that the Federal Reserve will soon wind down its aggressive tightening campaign.

The tech-heavy Nasdaq Composite gained 8.1% last week, its best week since March. The blue-chip Dow advanced 4.2%.

“There has been a significant shift in the market, with investors taking more risk-on across asset classes,” said Mark Hackett, head of investment research at Nationwide. “Technical indicators have improved dramatically, with investor sentiment, momentum, breadth and risk factors all showing significant improvement.”

Cboe volatility indexWall Street’s fear gauge, or VIX, fell 1 point to 22.5, its lowest level since August. The VIX, which tracks the S&P 500’s 30-day implied volatility, traded above the 30-point range for most of October.

However, the Federal Reserve has given little signal that it may depart from its tightening path anytime soon. Fed Governor Christopher Waller said Sunday, “We’re at a point where we can start thinking about going to a slower pace.” But, “We’re not softening. … Stop focusing on speed and start focusing on where the end point is going to be. As long as we get inflation down, that end point is still a ways away.”

Meanwhile, cryptocurrencies were higher, with Bitcoin and Ether posting their worst weeks since June, ending the week with one of the highest-performing exchanges spiraling quickly and abruptly to file for bankruptcy. Fear surrounding the saga briefly bled into the stock market.

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Investors spent the weekend digesting news on the political front. Democrats will control the Senate In the 2022 midterm elections, NBC News predicts. The party will hold at least 50 seats after fending off challenges from Sens. Mark Kelly of Arizona and Catherine Cortez Masto of Nevada.

As the third quarter earnings season continues, retail sales are heavily focused. Major retailers Walmart, Home Depot, Target, Lowe’s, Macy’s and Kohl’s are scheduled to release numbers this week.

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