U.S. equities and stock exchange traded funds were relatively flat Monday as energy sector weakness and ongoing unease over tensions between the U.S. and North Korea keep pressure on markets.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEARCA: SPY), iShares Core S&P 500 ETF (NYSEARCA: IVV) and Vanguard 500 Index (NYSEARCA: VOO), were 0.1% higher Monday.
Energy companies in the S&P 500 were among the worst performers Monday, falling 0.7%.
As the earnings season winds down and no major announcements slated for the economic calendar, some market observers anticipate muted conditions ahead, especially given the lofty valuations and steady economic growth.
“People are just standing back a little bit and saying let’s wait and see what happens here,” Paul Flood, portfolio manager at Newton Investment Management, the Wall Street Journal reports.
U.S. markets were also fluctuating in mixed trading Monday partially due to escalating tensions between the U.S. and North Korea after South Korea and U.S. forces engaged in computer-simulated war game exercises Monday.
“I think (the market’s decline) is a continuation of the weakness we’ve seen in the last couple of weeks,” Paul Nolte, portfolio manager at Kingsview Asset Management, told Reuters. “We have come off a really strong period for the market and are really just digesting the gains.”
Analysts still expect the U.S. economy to be supportive of the ongoing bull market rally in equities as growth is fast enough to bolster corporate earnings but slow enough to keep the Federal Reserve from tightening its monetary policy too quickly.
“Equity markets don’t just decline unless you have concerns that growth is going to decelerate—and there’s very little to suggest that at this point,” Jeremy Zirin, head of investment strategy Americas at UBS Chief Investment Office, told the WSJ.
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