U.S. Stocks Drift After Asia Rallies Lose Momentum

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U.S. stocks drifted in morning trading on Monday, pausing after a big rally in Asian markets failed to carry over. The S&P 500 was little changed, while the Dow Jones Industrial Average fell 0.3% and the Nasdaq Composite edged higher. The muted moves came after Japan's Nikkei 225 jumped 3.9% to a record high following a landslide election victory for the prime minister's party, which raised hopes for economic reforms. However, Wall Street took a break from its own rally on Friday, the best day for stocks since May, as concerns persist about high stock valuations.

Why it matters

The divergence between the strong performance in Asian markets and the more muted reaction on Wall Street highlights the global nature of financial markets and the differing economic and political factors that can drive regional stock movements. Investors are closely watching for signs of how the U.S. market may be impacted by factors like high inflation, potential interest rate hikes, and lofty stock valuations.

The details

The S&P 500 was virtually unchanged in morning trading, while the Dow Jones Industrial Average fell 154 points, or 0.3%, and the Nasdaq Composite edged 0.1% higher. The modest moves followed a 3.9% surge in Japan's Nikkei 225 index, which reached a record high after the prime minister's party won a landslide victory in parliamentary elections. The election result is expected to give the prime minister more power to push through economic reforms. However, Wall Street took a pause after its own strong rally on Friday, which was the best day for U.S. stocks since May. Concerns remain over whether stocks have become overvalued.

• The U.S. stock market rally on Friday was its best day since May.