Level 1 — Absolute Beginner
The stock market was mixed on Monday. Some numbers went up and some went down.
The Dow went down a little. The S&P 500 went up a little. The Nasdaq went up more.
Interest rates on long loans are high. The 10 year rate is about 5.25 percent.
People are waiting for a paper from the Fed. It shows what the bank leaders said last month.
- stock market
- A place where people buy and sell parts of companies.
- mixed
- Some up and some down.
- rate
- A price you pay to borrow money.
- loan
- Money you borrow.
- Fed
- The central bank of the United States.
- percent
- A part of one hundred.
- record
- The highest number ever.
- jobs report
- A paper that tells how many people have work.
Level 2 — Elementary
Wall Street ended Monday without a clear direction. The Dow Jones Industrial Average slipped 0.2 percent, the S&P 500 rose 0.2 percent and the Nasdaq Composite gained 0.4 percent.
The bond market made investors careful. The yield on the 10 year Treasury note was around 5.25 percent, even after a weak jobs report on Friday.
That report showed fewer new jobs than experts expected. Because of it, many people now think the Federal Reserve is less likely to raise interest rates soon. On Friday the Nasdaq touched a record high during the day.
On Monday traders waited for the minutes of the Fed's September meeting. The minutes can give hints about what leaders may do next. Asian markets were mostly higher.
- yield
- The money you earn from a bond each year, as a percent.
- Treasury
- Part of the government that borrows money by selling bonds.
- investor
- A person who puts money into something to earn more.
- expert
- A person who knows a lot about a topic.
- raise
- Make higher.
- minutes
- A written record of a meeting.
- hint
- A small clue.
- trader
- A person who buys and sells.
Level 3 — Intermediate
U.S. stocks finished Monday in different directions as investors balanced relief over softer jobs data against unease in the bond market. The Dow Jones Industrial Average fell 0.2 percent, the S&P 500 added 0.2 percent and the technology heavy Nasdaq Composite advanced 0.4 percent.
The caution came from Treasuries. The 10 year yield hovered around 5.25 percent, a level that makes borrowing expensive for companies and households, even though Friday's disappointing payrolls report had reduced expectations of an imminent Federal Reserve rate increase.
Friday's session had been more celebratory, with the Nasdaq reaching an intraday record as the weak employment data eased fears that the central bank would tighten policy again. Asian equities extended the mood, trading mostly higher in Monday's session.
Attention now turns to the minutes of the Fed's September meeting. Investors will parse them for clues about how divided policymakers are, since a market that has priced in a pause can be jolted by even a small change in tone.
- unease
- A feeling of worry.
- borrowing
- Taking money that must be paid back.
- imminent
- About to happen very soon.
- intraday
- Happening during a single trading day.
- tighten policy
- Make money more expensive to borrow.
- equities
- Shares in companies.
- parse
- Study carefully to understand.
- priced in
- Already reflected in the market price.
Level 4 — Advanced
Wall Street failed to pick a direction on Monday as relief over a soft labor market collided with persistent unease in bond markets. The Dow slipped 0.2 percent, the S&P 500 edged up 0.2 percent and the Nasdaq Composite climbed 0.4 percent, a pattern that reflects investors' continued preference for growth names over cyclical blue chips.
The Treasury market, rather than equities, set the tone. With the 10 year yield lingering near 5.25 percent, the cost of capital remains punishing for leveraged firms and prospective homebuyers alike, and the fact that yields did not retreat after Friday's disappointing payrolls suggests that investors are pricing in more than a single data point.
That report had briefly lifted spirits, pushing the Nasdaq to an intraday record on Friday as traders concluded that a weakening jobs market might stay the Federal Reserve's hand. Asian bourses took their cue from it, trading mostly higher on Monday.
The next catalyst is the release of the minutes from the Fed's September meeting. Markets will scrutinize the document less for what was decided than for the tone of dissent, because in an environment where a pause is widely expected, any hint of hawkish resolve could reprice assets quickly.
- collided
- Came into conflict.
- cyclical
- Tied closely to the ups and downs of the economy.
- leveraged
- Operating with a large amount of borrowed money.
- stay the hand
- Hold back someone from acting.
- bourse
- A stock exchange.
- catalyst
- Something that triggers a change.
- dissent
- Disagreement with the majority view.
- hawkish
- Favoring higher interest rates to fight inflation.
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