US stocks slipped on Monday as the 10-year Treasury yield jumped past 4% for the first time since August. This came ahead of a week that includes key inflation data and the start of earnings season. The Dow Jones Industrial Average fell 0.9%, approximately 400 points, after reaching a fresh record high.
Chinese and highly China sensitive stock markets had a really volatile session today — consistent with the view, which I see as correct (please see earlier posts, including over the last two weeks), that investors and traders were expecting way too much in terms of government… pic.twitter.com/M8w4F0hT2V
— Mohamed A. El-Erian (@elerianm) October 8, 2024
And just like that, the yield on the 10-year US government bond, a global benchmark, is back at 4%.#economy #markets #investing #investors pic.twitter.com/ynpDxuDY42
— Mohamed A. El-Erian (@elerianm) October 7, 2024
The S&P 500 shed almost 1%, while the Nasdaq Composite dropped nearly 1.2% as major tech names led the decline. Stocks hit session lows in the afternoon after a judge ordered Alphabet to open up Google’s app store business, Google Play, to more competition. Amazon fell over 3%, and Microsoft lost over 1.5%.
Nvidia was the only gainer among the “Magnificent 7” members, with its shares rising. Oil futures climbed more than 3.5% on Monday, extending their biggest weekly gains in over a year.
Energy the only sector higher today while Utilities fell most; latter continues to do much better YTD but is lagging MTD … at index level, NASDAQ fell most but is still outpacing small caps marginally MTD; Russell 2000 Value still in last place this month and year pic.twitter.com/tFpESczpgv
— Liz Ann Sonders (@LizAnnSonders) October 7, 2024
This was partly due to concerns that Iran’s recent attack might lead to further targeting of the country’s petroleum fields.
Hurricane Milton’s upgrade to Category 5 status off the Gulf of Mexico also contributed to higher crude prices. Insurance stocks fell as the storm headed toward the coast of Florida. Hopes for an outsized rate cut from the Federal Reserve diminished after a better-than-expected jobs report dispelled concerns about cracks in the labor market.
Traders have scaled back last week’s bets on a 0.50% rate cut in November, now seeing an 88% chance of a 0.25% move. Those convictions will be tested later this week, primarily with key consumer inflation data coming on Thursday. The major averages closed lower on Monday as the 10-year Treasury yield surpassed 4%.
The Dow Jones Industrial Average fell nearly 400 points or 0.9%. The S&P 500 dipped almost 1%, and the tech-heavy Nasdaq Composite also dropped roughly 1.2%. Nvidia was the only gainer among the “Magnificent Seven” stocks, up more than 2%.
Nvidia was on pace to close Monday’s session as the only gainer within the “Magnificent Seven” group.
Tech stocks lead market decline
Shares of the AI chip heavyweight were up nearly 3%, while the rest of the big tech names were in the red.
Alphabet’s stock sank more than 2% on Monday after a judge ordered the tech giant to open up Google’s app store business, Google Play, to more competition. The injunction requires Alphabet to allow Android applications from competitor sources, stemming from a 2020 lawsuit alleging Google squashed competition via its app store controls. Apple was downgraded from Buy to Hold by Jefferies analyst Edison Lee, who cited concerns over inflated expectations for its new AI-enabled iPhones.
Lee noted that smartphone hardware is not yet advanced enough to meet high-tech AI demands, tempering expectations for the iPhone 16 and 17. Consumers are feeling more confident about the housing market than they have in the past two years, with many expecting mortgage rates to fall in the next 12 months. The Fannie Mae Home Purchase Sentiment Index rose to 73.9 in September, its highest reading in more than two years.
Despite this, only 19% think it’s a good time to buy a home, near all-time lows. Insurance stocks sank on Monday as Hurricane Milton strengthened to a Category 5, threatening the Gulf of Mexico and Florida. Insurers Allstate and Dow component Travelers both dropped more than 3%.
Florida-based Universal Insurance fell more than 18%. Meanwhile, crude futures extended gains, rising more than 3%. Google is set to learn how the Department of Justice proposes to dismantle its dominance in the online search market.
Prosecutors are expected to submit a document in federal court outlining potential remedies. Shares of Trump Media & Technology Group surged about 15% after Elon Musk made a surprise appearance at Donald Trump’s rally in Butler, PA. Musk, who supports Trump ahead of next month’s election, told the crowd that Trump is the only candidate who can “preserve democracy in America.”
Super Micro Computer’s shares jumped as much as 17% on Monday after the company announced significant AI server shipments.
The company is now selling over 100,000 AI chips per quarter. The stock had previously declined due to reports of possible accounting violations. Oil prices extended gains on Monday, with West Texas Intermediate futures rising more than 2% to trade above $76 per barrel, and Brent crude futures also rising more than 2% to reach $80 per barrel.
This follows last week’s missile strike by Iran, with Israel expected to retaliate.
