Markets Stay Mellow in a Holiday-Thinned Session

Bloomberg, Investor’s Business Daily, the Wall Street Journal, and Fortune contributed to this report.

Stocks and bonds barely budged Monday as thin holiday trading kept things sleepy — investors cheered last week’s tame US inflation print and pushed bets that the Federal Reserve will ease rates later this year.

Futures on the S&P 500 were essentially flat while Europe’s Stoxx 600 eked out a small gain. A bright spot: NatWest Group Plc jumped after Citigroup Inc. nudged up its price target on the lender. Meanwhile, German bunds and US Treasury futures sat steady after US yields hit their lowest levels since December.

US markets were offline for the Presidents Day holiday, which trimmed volume and left overnight futures moves looking a lot bigger on paper than they might be in real trading. Several Asian and Chinese markets were also closed for Lunar New Year, keeping global liquidity light.

The tape has been messy lately. Mega-cap names — including Apple, Alphabet, Amazon.com, Meta Platforms and to a lesser degree Nvidia — dragged the Nasdaq and S&P below their 50-day lines, even as the equal-weight S&P ETF (RSP) kept hitting new highs.

Cryptos were a bit lively: bitcoin hovered just under $68,000 after flirting with $70,000 over the weekend. That’s one of the few pockets of clear direction in an otherwise directionless market.

Sector rotation and growing worries about AI disruption are making life tricky for stock pickers. Software and certain service groups took heavy losses as investors reassessed winners and losers in the AI rush — while homebuilders, energy and industrials found buyers. The result: lots of opportunity, and lots of risk.

On the fixed-income side, the 10-year Treasury yield slid, reinforcing the narrative that investors expect rate cuts later this year — a main reason bonds didn’t move much despite the mixed stock action.

Bottom line: with lots of holidays and thin flows, don’t read too much into one-day moves. The market’s still sorting out AI’s winners, megacap leadership and how fast the Fed will loosen policy — and until a clearer trend emerges, expect more choppy sessions and plenty of headline-driven whipsaws.