Stocks Near Records on Buyout Deals Amid Inflation Worries

U.S. stocks held near their record highs on Monday, buoyed by a pair of buyout announcements. The S&P 500 climbed 0.5%, pulling within 0.5% of its all-time high set earlier this summer. The Nasdaq composite rose 0.8% and was on track to set its own record, while the Dow Jones Industrial Average dipped 0.1%. The biggest gain in the S&P 500 came from PTC, which surged 34% after Schneider Electric announced it would acquire the software company for $205 per share, valuing it at about $22.6 billion.

The market remained relatively quiet as investors awaited the start of the latest earnings reporting season. Analysts anticipate nearly 30% year-over-year profit growth for S&P 500 companies, which would mark the third consecutive quarter of growth above 25%. Meanwhile, oil prices continued to fluctuate due to uncertainty surrounding the war with Iran, with Brent crude trading between $100 and $103 before settling at $101.71, down 0.5%.

Higher oil prices have pushed up bond yields, with the 10-year U.S. Treasury yield rising to 5.33% from 5.28% late Friday. Elevated yields can slow economic growth by increasing borrowing costs and making investors reluctant to pay high prices for stocks. Another factor driving yields higher is the strength of the U.S. economy, fueled by significant business spending on AI data centers and robust consumer spending.

A report released Monday provided a mixed assessment of the U.S. economy, indicating that growth in the services sector, including real estate, transportation, and finance, continued for a 27th straight month but fell slightly below expectations. The report also noted that prices for materials and services were rising at a faster pace, which could signal higher inflation ahead.