Here are the key news, trends, and analysis investors need to start their trading day:
1. Dow futures reduced heavy overnight losses after Friday’s records
Trader on the New York Stock Exchange, July 20, 2021.
Dow futures fell modestly on Monday, reducing much of the overnight losses from nearly 300 points as stocks plunged in Hong Kong and China on concerns over Chinese government crackdown on education and real estate.
A big week ago for tech stocks on Wall Street, the Dow Jones Industrial Average closed above 35,000 for the first time on Friday. Four days in a row with profits more than offset the slump of more than 2% last Monday when heightened concerns about an increase in Covid cases due to the Delta variant briefly hit the market. The S&P 500 and the Nasdaq also closed at record highs on Friday.
The Fed’s two-day July meeting is slated to begin on Tuesday. Investors will be looking for signals about when central bankers may start tightening monetary policy and how they view rising inflation. The yield on 10-year government bonds fell to around 1.25% on Monday. The yield, which is contrary to the price, hit a 5½-month low of almost 1.13% last week.
2. Asian stocks fueling Chinese regulatory concerns, US talks
A person wearing a protective mask walks past the sign for Hong Kong Exchanges & Clearing Ltd. (HKEX) on display at the Exchange Square complex in Hong Kong, China on Wednesday August 19, 2020.
Roy Liu | Bloomberg via Getty Images
Hong Kong’s Hang Seng stock index fell more than 4% overnight. Mainland China stocks also plummeted, with the Shanghai Composite and Shenzhen Component each dropping over 2%.
Many Chinese education stocks listed in Hong Kong and the US lost about half their value after Beijing announced new rules on Friday that exclude for-profit tuition in core school subjects to ease financial pressures on families. Chinese regulators also took steps on Friday to clean up irregularities in the real estate market.
In addition to the uncertainty, there was a bumpy start at a meeting of high-ranking Chinese and US representatives. During talks with US Secretary of State Wendy Sherman on Monday, Chinese Vice Secretary of State Xie Feng said relations between the two nations were in a “state” and urged America to “change its highly misguided mindset.”
3. Bitcoin is trading to a six-week high of nearly $ 40,000
An illustration showing physical imitation banknotes and coins of the cryptocurrency Bitcoin.
Ozan Kose | AFP via Getty Images
Bitcoin rose to its highest level since mid-June on Monday, flirting at $ 40,000 before falling back below $ 39,000. Traders hoped last week’s positive comments from cryptocurrency enthusiasts, including Tesla CEO Elon Musk and Twitter CEO Jack Dorsey, would get Bitcoin back on track. Bitcoin hit an all-time high of nearly $ 65,000 in mid-April. On June 22nd, Bitcoin briefly went negative for the year, dropping below $ 29,000. The inventors will see how Bitcoin’s wild ride can affect Tesla’s quarterly results. Musk’s Tesla, which owns the crypto on its corporate balance sheet, will be reporting profits after the closing bell on Monday.
4. The Delta variant leads to an increase in Covid cases in all 50 states and DC
The intensive care nurse Emily Boucher, who works in the intensive care unit at Johnston Memorial Hospital, takes care of Covid patient Hannah Church (25), who was first diagnosed with the coronavirus on May 30, June 16, 2021 in Abingdon, VA.
Kathernine Frey | The Washington Post | Getty Images
Covid cases are increasing in all 50 states and the District of Columbia as the Delta variant spreads rapidly in the US. Cases hit a 15-month low in late June before infections began to rise. Vaccination rates peaked in April and have declined significantly in recent months. White House senior medical advisor Dr. Anthony Fauci said Sunday that Americans with compromised immune systems may need booster shots for Covid vaccines. Fauci told CNN that health officials are considering revising mask guidelines for vaccinated people in the US
5. Senators say they are entering into a bipartisan infrastructure deal
U.S. President Joe Biden speaks to the press after meeting with the Senate Democrats to support his infrastructure and business investment goals during a Democratic lunch at the U.S. Capitol on July 13, 2021 in Washington, DC, July 14, 2021 to win.
Andrew Caballero-Reynolds | AFP | Getty Images
Senators are rushing to finalize a bipartisan infrastructure deal as early as Monday as pressure increased on all sides to show progress on President Joe Biden’s top priority. Leading Republican negotiator, Ohio Senator Rob Portman, said the two sides would have “about 90% of the way to get there” in an agreement. A senior Democrat, Senator Mark Warner of Virginia, said he was confident a final bill would be in by Monday afternoon. The White House wants a bipartisan agreement for this first phase of infrastructure. But as the talks drag on, concerned Democrats, who have little control over the House and Senate, could leave Republicans behind and try to go it alone.
– Reuters and The Associated Press contributed to this report. Follow all market activity like a pro on CNBC Pro. Get the latest on the pandemic with coronavirus coverage from CNBC.