US Stocks Wavering In Thin Trade As Long-End Bonds Fall

US stocks ended little changed in remarkably thin trading Monday and Treasuries ticked lower at the long-end of the curve as investors focused on corporate results and prospects for faster policy tightening by the US central bank.

The S&P 500 closed down less than 0.1%, after swinging between narrow gains and losses on volumes almost 20% below the 30-day average in the first trading day following a long holiday weekend.

Bank of America Corp. was expected for the biggest daily advance in more than a month as the bank joined a string of earnings beats by big lenders such as Morgan Stanley and Citigroup Inc. Markets in much of Europe were shut for Easter.

Treasury yields moved higher in longer maturities, as investors looked forward to speeches by Fed policy makers this week for new clues on whether the central bank will raise interest rates by a half point in May to curb price pressures. A jump in energy costs highlighted inflation concerns, as US natural gas prices surged to the highest intraday level in more than 13 years. Oil climbed above $108 a barrel in New York.

Volumes are light on this Easter Monday, with many European markets closed and even more families on spring break. In that environment it doesn’t take much of a sentiment shift to produce a relatively outsized move.

Twitter posted modest gains in after-hours trading following a report that Apollo Global Management Inc. has held discussions about backing a possible deal for Twitter either by backing the offer made by Musk or another bidder like private-equity firm Thoma Bravo.

In other market moves, Twitter Inc. rose the most in two weeks after the social media company launched a so-called poison pill to thwart Elon Musk’s unsolicited bid to take the company private and Musk said the economic interests of the board are not aligned with shareholders.

The alternating excited and depressed markets have been a boon for traders, but not so much for long-term investors. Volatility is up, worries abound, so investors are looking at companies and sectors that can still do well no matter the outlook. If inflation continues to be one of those worries, look for commodity companies to continue their run higher as well.

The pattern across markets suggests investors remain uncertain whether high inflation has already peaked. Price pressures are being fanned by supply-chain snarls from China’s Covid restrictions and disruptions to commodity flows due to the war. Concern is growing that the US economy faces a downturn as the Fed pivots toward aggressive policy tightening to contain the cost of living.

History suggests the Fed will face a difficult task cooling inflation without causing a US recession, according to Goldman Sachs Group Inc. It put the odds of a contraction at about 35% over the next two years.

The positive effects from inflation on earnings growth for US firms have peaked as rising costs trim their margins and price pressures caused by the Ukraine war hit consumers, according to Morgan Stanley strategists. A New York Fed survey showed potential home buyers are getting discouraged by rising mortgage rates and home prices.

Chinese data were mixed, adding to investor concerns about the country’s stalled economic recovery. In Shanghai, officials reported the first deaths from a surging Covid-19 outbreak. The city has also published plans to resume production after a prolonged lockdown, recommending businesses adopt so-called closed-loop management, where workers live on-site and are tested regularly.

Meanwhile, Ukrainian officials said the remaining defenders of Mariupol were encircled by Russian forces but have not surrendered the strategically important port city, as a deadly strike was reported in Lviv near the Polish border. Ukrainian officials will be in Washington for this week’s meetings of the International Monetary Fund and the World Bank to seek financial support.