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Stocks End Mixed as Wall Street Eyes Fed Tapering and COVID Surge

Stocks end mixed Monday as investors increase bets the Federal Reserve will pull back on stimulus following a stronger-than-expected U.S. jobs report.

Stocks finished mixed Monday as investors increased bets the Federal Reserve would pull back on stimulus following a strong jobs report and monitored the spread of the highly contagious COVID-19 delta variant.

Oil prices declined and gold prices were lower from an overnight "flash crash" Monday that briefly pulled bullion prices to a four-month low.

The Dow Jones Industrial Average ended down 106 points, or 0.3%, to 35,101, the S&P 500 slipped 0.09% and the Nasdaq rose 0.16%.

The yield on the benchmark 10-year Treasury rose Monday to 1.325%.

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The Dow and the S&P 500 closed at records Friday following a jobs report for July that pointed to a labor-market recovery but also boosted expectations the U.S. central bank may soon start paring back its extraordinary stimulus that has underpinned stock market gains. The S&P 500 notched its 44th record close of 2021 on Friday and finished the week with a gain of 0.9%.

The nonfarm payrolls report, released Friday, showed a net 943,000 new jobs were created last month while average hourly wages rose 4% from last year to just more than $30.50. 

The data triggered bets the Federal Reserve would begin slowing the pace of its $120 billion in monthly bond purchases while at the same time increasing interest rates.

Dallas Federal Reserve President Robert Kaplan told Bloomberg in an interview the Fed should begin gradually tapering asset purchases sooner rather than later.

“I would be supportive of adjusting these purchases soon, but once we start the adjustment process, I would probably prefer to have it be more gradual,” Kaplan told Bloomberg last week before the jobs report was released.

Prices of commodities, such as oil, slumped on worries that restrictions put in place to curb the spread of the COVID-19 virus variant will crimp demand. West Texas Intermediate crude oil, the U.S. benchmark, fell 2.12% to $66.83 a barrel.

Cases and hospitalizations from COVID-19 have reached their highest since February as the variant spreads throughout the U.S.

AMC Entertainment  (AMC) - Get Free Report is expected to report quarterly earnings after the closing bell on Monday. Later this week, reports will be issued by Coinbase Global  (COIN) - Get Free Report, Walt Disney  (DIS) - Get Free Report, Wendy's  (WEN) - Get Free Report, eBay  (EBAY) - Get Free Report and Airbnb  (ABNB) - Get Free Report.

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Investors also will be tracking the progress of the Senate's $1 trillion infrastructure bill, which  would provide funding for public-works programs such as roads, bridges, railroads, waterways, ports and broadband internet expansion. 

The bill looked set for passage in the upper house early this week before moving on to a sterner challenge in the House of Representatives.