U.S. stocks eked out a gain while the dollar climbed in holiday-thinned trading as investors contemplate one more Federal Reserve interest-rate hike following Friday’s U.S. jobs data.

The S&P 500 benchmark rose 0.1 per cent after falling as much as 0.8 per cent intraday. The Nasdaq 100 Index clawed its way back from a 1.5 per cent loss to end the day little changed. The tech-heavy benchmark has gained for the past three weeks as investors snapped up mega-cap stocks in the sector. Yields on the policy-sensitive two-year Treasury hovered around 4 per cent. 

Tech stocks were weak on the prospect of another rate hike, while an Apple Inc. report that personal computer shipments fell sharply added to the slide. Semiconductor names like Micron Technology Inc. helped stem tech losses after rival Samsung Electronics said on Friday that it would cut memory chip production. 

Volumes were light for U.S. equities markets with much of Europe shuttered for a holiday. Trading in S&P 500 companies was more than 20 per cent below the 30-day average at this time of day.

On Friday, a solid U.S. hiring report bolstered bets for another Fed rate increase. Traders are upping their wagers on a May rate hike ahead of Wednesday’s report on consumer prices, which is expected to show a 0.4 per cent monthly increase in core CPI. 

Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets, said that the March employment numbers provide “no hurdle for the Fed” to issue a 25 basis point hike in May, although upcoming data could impact the decision.

“With the employment landscape remaining surprisingly robust despite the cumulative global policy tightening in place, the Fed’s looming rate decision will almost entirely be contingent on the March CPI report,” he wrote in a note.

Treasury yields climbed, rebounding from session lows, amid a revival in investment-grade credit issuance Monday while Goldman Sachs strategists pointed out there was “significant room to correct higher” as expectations for a near-term Fed rate hike grow. The yield on the 10-year advanced to 3.42 per cent.

Swaps traders have been betting that the Fed will be done with its hiking cycle and lowering its target rate sometime in 2023, but it’s still unclear when the central bank will start to cut rates, according to Matt Diczok, head of fixed-income strategy for Bank of America Corp.

 “The market feels fairly certain it’s going to start happening this year, but we need to see that play out more in the inflation data,” he told Bloomberg Television.

Fears of an economic downturn were also top of mind Monday. 

“The market’s bad news bears are still being fed a data diet sufficient to prolong their existence. More broadly, a host of economic data — including JOLTS, ADP private payrolls, and service and manufacturing PMIs — have come in softer than expected, increasing the odds of at least a mild recession,” said Saira Malik, chief investment officer at Nuveen.

Later this week, traders will be watching earnings and trying to gauge consumer financial health when Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. kick off reporting for the banking sector Friday.

Members of the C-Suite will look to other companies for clues on how best to communicate during earnings seasons, according to Lori Calvasina at RBC Capital Markets. “Unfortunately the financials are always on the hot seat early, so they do have to take some of the hits early on before the rest of corporate America can adapt.”

Meanwhile, Bank of Japan Governor Kazuo Ueda held his first news conference since taking the new role. The Bank of Japan’s yield curve control and negative interest rates are appropriate amid the current economy, Ueda said, signaling any significant changes to its monetary policy framework may be unlikely for the time being. 

In a report Monday, the International Monetary Fund put forward that rates in the U.S. and other industrial countries will revert toward ultra-low levels instead of the 1.5 per cent to 2 per cent real neutral interest rate former U.S. Treasury Secretary Lawrence Summers has suggested.

The dollar rose for the third day while the yen fell. Gold slid, dropping below US$2,000 an ounce. Bitcoin defied a selloff in risky assets to climb as much as 4.2 per cent to US$29,306.

After China’s military drills over the weekend increased tensions between the U.S. and China, Peter Tchir, head of macro research at Academy Securities Inc. said on Bloomberg Television investors are not paying attention to geopolitical risks.

“Everywhere we look I think there’s this danger, it’s growing and I’m getting a little bit nervous that a lot of investors pay lip service to geopolitical risk but then kind of push it off,” Tchir said. “We’re being a little bit too complacent on the geopolitical front.”

Key events this week:

• New York Fed President John Williams takes part in discussion hosted by the Economics Review at New York University, Monday
• China PPI, CPI, Tuesday
• IMF global financial stability report, Tuesday
• Chicago Fed’s Austan Goolsbee, Minneapolis Fed’s Neel Kashkari and Philadelphia Fed’s Patrick Harker speak at separate events, Tuesday
• Canada rate decision, Wednesday
• U.S. FOMC minutes, CPI, Wednesday
• Richmond Fed’s Thomas Barkin speaks, Wednesday
• China trade, Thursday
• U.S. PPI, initial jobless claim, Thursday
• U.S. retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
• Major U.S. banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.1 per cent as of 4 p.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average rose 0.3 per cent
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.4 per cent
• The euro fell 0.4 per cent to US$1.0862
• The British pound fell 0.3 per cent to US$1.2383
• The Japanese yen fell 1.1 per cent to 133.59 per dollar

Cryptocurrencies

• Bitcoin rose 3.8 per cent to US$29,210.93
• Ether rose 1.8 per cent to US$1,891.31

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.42 per cent
• Germany’s 10-year yield was little changed at 2.18 per cent
• Britain’s 10-year yield was little changed at 3.43 per cent

Commodities

• West Texas Intermediate crude fell 1.1 per cent to US$79.81 a barrel
• Gold futures fell 1 per cent to US$2,006.90 an ounce