U.S. stocks moved higher in early afternoon trading Monday, while Treasury bond yields firmed and the dollar added to gains against its global peers, as investors looked to shrug off concerns linked to China's sputtering recovery ahead of a series of earnings and data releases focused on the strength of the domestic consumer.
Asia stocks slumped lower in the overnight session, led by a record decline in shares of private property developer Country Garden, which missed a pair of bond payments over the weekend amid a liquidity crisis it called “the greatest difficulty since our founding” that has rattled the country's debt-laden building sector.
The Country Garden tumble pulled China shares sharply lower, while markets in Hong Kong and Japan also firmly in the red, as investors fled to the safety of the U.S. dollar. The region-wide MSCI ex-Japan index, meanwhile, was marked 1.235 lower into the close of the session.
The selling seemed focused on Asia markets, however, as Europe's Stoxx 600 was marked 0.13% lower in mid-day Frankfurt trading, and Wall Street was only modestly lower at the start of the session despite another move higher for U.S. Treasury bond yields ahead of a massive week for new borrowing.
Heading into the afternoon session, the S&P 500, which is down around 2.75% for the month of August, was marked 17.5 points higher while the Dow Jones Industrial Average fell 63.5 points, The tech-focused Nasdaq was up 90 points.
Around 17 S&P 500 companies are expected to publish second quarter update this week as the reporting season draws to a close.
With more than 90% of the S&P 500 reporting so far, collective second quarter profits are likely to fall 3.8% from last year to a share-weighted $448 billion. That tally is expected to improve over the three months ending in September, however, when profits are likely to rise 1.3% to $463.7 billion, according to Refinitv forecasts.
Big box retailers Home Depot (HD) -), Target Corp (TGT) -) and Walmart (WMT) -) are slated to provide July quarter updates this week, with investors likely focused on the prospects for near-term sales as consumers struggle with rising gas prices, soaring mortgage rates and the end of a moratorium on student loan payments that could take some $100 billion out of retail spending over the coming year.
The Commerce Department will also publish its estimate for July retail sales on Tuesday at 8:30 am Eastern time, with economists looking for a 0.4% gain as nominal receipts from gas station sales, linked to a surge in prices, boosts the overall spending tally.
The Treasury will auction $132 billion in new 3-month and 6-month bills late today, following on from benchmark 10-year and 30-year bond sales last week, as part of a quarterly funding effort aimed at raising around $103 billion by the end of September.
A faster-than-expected reading for producer price inflation last month, published by the Bureau of Labor Statistics on Friday, has also added to the upward march in yields, with benchmark 10-year notes pegged at 4.148% after hitting a year-to-date high of 4.2% in early New York trading and 2-year notes changing hands at 4.901%.
And while Goldman Sachs is forecasting the first Federal Reserve rate cut in the first quarter of next year, the odds of a November hike have risen to 34.5%, according to the CME Group's FedWatch, a move that would lift the benchmark lending rate to between 5.25% and 5.5%.
The U.S. dollar index, meanwhile, was marked 0.13% higher against a basket of its global peers at 102.972, and trading just over the 145 mark -- a key risk sentiment indicator -- against the Japanese yen.
Global oil prices were steady, with U.S. crude slipped 77 cents to $82.42 per barrel, despite weekend reports of a Russian warship firing warnings shots towards a cargo vessel in the Black Sea.
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