U.S. stocks pulled back from their record-setting run on Monday, and indexes elsewhere around the world took a pause ahead of a frenetic week for markets. Investors are waiting to see who will be President Donald Trump’s pick to head the Federal Reserve, what several of the world’s biggest central banks will decide on interest rates, and whether Apple and other big U.S. companies can keep piling their profits higher.
KEEPING SCORE: The Standard & Poor’s 500 fell by 10 points, or 0.4 percent, to 2,571, as of 2 p.m. Eastern time. Losses for health-care stocks and other areas of the market overshadowed gains for energy and technology companies. The index closed at a record on Friday after climbing for seven straight weeks, its longest such streak since 2014.
The Dow Jones industrial average fell 81 points, or 0.3 percent, to 23,353, and the Nasdaq composite dropped 17 points, or 0.3 percent, to 6,684. Smaller stocks fell more than the rest of the market, and the small-cap Russell 2000 index slid 22 points, or 1.5 percent, to 1,486.
FED WATCH: Investors expect Pres. Trump to announce his choice for the next chair of the Federal Reserve by the end of the week. The central bank has played a pivotal role in the economy’s recovery from the Great Recession and the stock market’s leap to record after record. Chair Janet Yellen’s term is scheduled to end in February, and she is one of Pres. Trump’s finalists, but speculation has centered on others to succeed her.
The choice will have far-ranging effects on the markets, particularly if the new chair advocates a more aggressive policy in raising interest rates than Yellen has. Low interest rates have helped to push returns higher for bond funds, stocks and all kinds of other investments around the world.
TAX TIMELINE: Investors are also waiting to see what progress can be made in Washington on revamping the nation’s tax system. Stocks have climbed in recent weeks in part on rising expectations that lower tax bills — and bigger profits — may be on the way for companies.
But tax changes still face resistance on Capitol Hill, as Congress looks for ways to raise revenue so the deficit doesn’t leap higher.
Political turmoil could also affect the overhaul of taxes. President Trump’s former campaign manager, Paul Manafort, was one of two people indicted Monday on charges of conspiracy to launder money, among other accusations. The indictments came out of an investigation into possible coordination between Pres. Trump’s 2016 election campaign and Russia.
BUY BUY: Consumer-spending growth in the United States accelerated last month, led by a pickup in auto sales, and reached its strongest level since the summer of 2009. Incomes also rose in line with economists’ expectations.
The week’s headline economic report will arrive on Friday, when the government will give its monthly update on how many jobs the economy created.
More signs of a strengthening economy would give the Federal Reserve leeway to raise interest rates further, and many economists expect the next increase to happen in December.
FED MEETING: Little is expected from the Fed’s meeting this week, though. The Federal Reserve is scheduled to start a two-day meeting on Tuesday.
Other central banks meeting this week include the Bank of Japan and the Bank of England.
EARNINGS WATCH: Strong earnings growth has helped to drive the stock market higher, and tech stocks have been delivering some of the most consistent growth. Companies are in the midst of reporting their results for the July-through-September quarter, and they will likely need to deliver strong growth in order to justify the big gains their stock prices have made.
Apple will report its results on Thursday and is one of more than 100 companies in the S&P 500 scheduled for the week.
MORE PAIN: Merck recorded one of the biggest losses in the S&P 500 after it withdrew an application to market its Keytruda cancer drug in Europe. Merck shares fell $3.29, or 5.7 percent, to $54.95. The stock fell 6 percent Friday following Merck’s quarterly earnings.
HANG UP: Shares of Sprint and T-Mobile US plunged after a report from Nikkei in Japan said that Sprint’s majority owner, Softbank, wants merger negotiations between the companies called off. Sprint fell 52 cents, or 7.4 percent, to $6.48 after dropping as low as $6.05 earlier in the afternoon. T-Mobile US decreased $2.62, or 4.2 percent, to $60.33.
AROUND THE WORLD: European stock markets were mixed, with the French CAC 40 close to flat and Germany’s DAX up 0.1 percent. The FTSE 100 in London dipped 0.2 percent.
In Asia, Japan’s Nikkei 225 index was virtually flat, South Korea’s Kospi rose 0.2 percent and the Hang Seng in Hong Kong lost 0.4 percent.
COMMODITIES: Benchmark U.S. crude rose 15 cents to $54.05 per barrel. Brent crude, the international standard, rose 28 cents to $60.41 per barrel.
Gold gained $6.50 to $1,278.30 per ounce, silver rose 10 cents to $16.85 per ounce, and copper was close to flat at $3.11 per pound.
CURRENCIES: The dollar dipped to 113.16 Japanese yen from 113.81 yen late Friday. The euro rose to $1.1628 from $1.1599, and the British pound inched up to $1.3196 from $1.3125.
YIELDS: Bond yields fell as prices for Treasurys rose. The yield on the 10-year Treasury note fell to 2.37 percent. The two-year yield dipped to 1.58 percent from 1.60 percent late Friday, and the 30-year yield sank to 2.88 percent from 2.92 percent.