Late fade pushes S&P 500 below its record high

Stocks couldn’t hold on to the meager gains they made on Wall Street Monday, pulling the S&P 500 slightly below the record high it set late last week. The benchmark index slipped 0.1%.

Losses for big banks offset gains elsewhere in the market amid some worries over how much banks would suffer following soured trades made by a major U.S. hedge fund. Gains by the technology heavyweights helped limit the losses.

The yield on the 10-year Treasury note climbed to 1.71%. Crude oil prices ended higher. A widely followed measure of nervousness in the stock market climbed 10%, but the VIX index, which shows how much volatility traders are bracing for from the S&P 500, remains close to its lowest level since the pandemic rocked markets a year ago.

“It’s high, which indicates people are nervous, but it’s not panicky,” said Tom Martin, senior portfolio manager with Globalt Investments.

The movements mark the latest ebb for Wall Street, which has been mostly climbing in a series of stops and starts. Supporting the market have been rising expectations that economic recovery is on the way thanks to COVID-19 vaccinations, immense spending by the government and continued low rates from the Federal Reserve. Weighing on stocks at the same time, though, are worries about a coming rise in inflation and possibly too-ebullient prices across the market.

Several key reports on the economy are coming this week, including Friday’s jobs report, where economists expect to see a big acceleration in hiring. On Wednesday, President Joe Biden will also give details about his proposal to rebuild roads, bridges and other infrastructure. Shares of raw-material producers have rallied recently on rising expectations for infrastructure spending by Washington.

The market’s spotlight, however, was squarely on financial companies after Japanese bank Nomura Holdings and Swiss bank Credit Suisse said they’re facing potentially significant losses because of their dealings with a major client, though the exact magnitude is still unclear.

Nomura estimated the claim against its client at $2 billion.

Credit Suisse said that it “and a number of other banks” are exiting trades they made with a significant U.S.-based hedge fund, which defaulted on a “margin call” last week. A margin call happens when a broker tells a client to put up cash after it borrowed money to make trades.

Neither Credit Suisse nor Nomura named the client, but news reports identified it as New York-based Archegos Capital Management.