U.S. equity markets closed lower coming out of the holiday weekend, while global markets were mixed. Asian stocks were higher overnight, led by a rally in Chinese equities after trade data beat expectations and tech shares outperformed following Tencent’s share-buyback news.

On the flip side, European indexes finished in negative territory on investor concerns that the European Central Bank might dial down its stimulus.

Oil declined, and the 10-year Treasury yield rose to 1.37 percent. The  price of crude oil was down $.90 at $68.39 and the spot price of gold was down $37 to $1,769.50.

There was no U.S. economic data scheduled today, and sentiment was slightly cautious to start the holiday-shortened week.

The spread of the Delta variant remains a headwind to growth, as it has the potential to dampen consumer spending, leading to downgrades in third-quarter GDP estimates.

Also, supply-chain disruptions are proving to be more persistent than initially thought, limiting how fast the economy can normalize.

Yet, the general uptrend in equities is intact, as investors have so far been looking through the near-term weakness and instead focusing on the strong corporate earnings delivery and the very loose financial conditions.

Seasonality for the month of September has historically been less favorable for stocks, but most of the negative returns had been realized when the market was in downtrend in the prior months, which is not the case this time.

Regardless, a focus on balance and diversification is warranted, in our view, as U.S. stocks have been higher for seven straight months, the longest winning streak since January 2018.

Central-bank and fiscal-policy announcements will likely dominate the headlines in the comming weeks.

The Bank of Canada meets on Wednesday and the ECB meets on Thursday. Both central banks are likely to hold policy unchanged but investors are looking for clues to whether eurozone policymakers are getting ready to taper their bond purchases.

In the U.S., President Joe Biden will likely make his choice this week on whether to renominate Federal Chair Jerome Powell to a second term.

On the fiscal front, Congress returns from recess, and the focus will be on the debt ceiling and infrastructure bill.

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