10-year Treasury yield retreats after hitting 5%: Markets wrap

(Bloomberg) — A renewed volatility in the stock market weighed on stock trading on Monday, as investors also looked ahead to earnings from a handful of big tech companies. Oil and gold retreated as Israel held off a broad ground invasion of Gaza.

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The S&P 500 swung between gains and losses after briefly breaching its key 4,200 mark — marking a 50% retracement from the lows seen in the banking turmoil in March. Wall Street’s so-called fear gauge — the VIX — fell from a seven-month high. The 10-year Treasury yield fell after touching 5% for the first time since 2007. The dollar fluctuated.

“The peak level for the 10-year yield is still anyone’s guess, and the U.S. stock market should remain under pressure as the breadth and relative strength measures have yet to peak,” said Sam Stovall, chief investment strategist at CFRA. “As a result, one thing is certain: October will add to its reputation as the most volatile month of the year.”

According to Morgan Stanley’s Michael Wilson, the odds of a year-end rally in U.S. stocks are fading as investors face a number of risks, from higher profit estimates to the Federal Reserve’s policy tightening. “Earnings expectations for the fourth quarter and 2024 remain very high, and policy tightening from a monetary and fiscal standpoint may be felt,” the strategist said, adding that he would not be “surprised” to see further declines in the S&P 500.

Shares of companies that underperformed analysts’ estimates of the earnings-per-share measure, reported by about a fifth of S&P 500 members, fell an average of 3.7% in the benchmark index on the day the results were released. program. This was the worst performance in the data’s history for the second quarter of 2019.

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“October can be a tough month for stocks, but for the most part the S&P 500 tends to see gains,” said Lori Galvacina, head of U.S. equity strategy at RBC Capital Markets. “Unfortunately, as of mid-October 2023, US stocks are still in a scary place.”

Galvacina said in his firm’s cross-asset models, the case for U.S. stocks relative to bonds has worsened, and after a brief move, earnings retracement trends have turned modestly negative for the S&P 500. Meanwhile, he noted that its sentiment model pulled back sharply, but not back to the point where U.S. stocks are oversold.

Company Highlights:

  • Chevron Corp. has agreed to buy Hess Corp. for $53 billion, aiming to boost production growth as the U.S. oil industry bets on a sustainable future for fossil fuels.

  • Reliance Industries Ltd, controlled by Asia’s richest man Mukesh Ambani, is nearing a cash-and-stock deal to buy Walt Disney Co’s India operations, according to people familiar with the matter.

  • Roche Holdings AG is paying $7.1 billion to acquire Holdings Inc., a developer of a promising treatment for inflammatory bowel disease.

  • EngageSmart Inc., a business-to-business software company, has agreed to be acquired by Vista Equity Partners in an all-cash deal valued at about $4 billion.

  • Walgreens Boots Alliance Inc. JPMorgan Chase & Co rose as the drugstore chain upgraded its rating to overweight.

  • Pinterest Inc. After Stifel Raises Buy Rating Higher, there is room for growth outside the company’s domestic market.

  • Okta Inc. after the identity verification company said hackers used stolen credentials to access its support case management system. has fallen.

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Highlights of this week:

  • Reserve Bank of Australia Governor Michael Bullock speaks at the Commonwealth Bank’s annual conference in Sydney on Tuesday.

  • The Paris-based International Energy Agency released its World Energy Outlook annual report on Tuesday

  • Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, Tuesday

  • Euro-area bank credit survey, Tuesday

  • US S&P Global Manufacturing PMI, Tuesday

  • Microsoft, Alphabet earnings, Tuesday

  • Australia CBI, Wednesday

  • Germany IFO Business Environment, Wednesday

  • Canada rate decision, Wednesday

  • US new home sales, Wednesday

  • IBM, Meta Earnings, Wednesday

  • European Central Bank interest rate decision; President Christine Lagarde held a press conference on Thursday

  • US Total Inventories, GDP, US Durable Goods, Initial Jobless Claims, Thursday

  • Intel, Amazon earnings, Thursday

  • China Industrial Profits, Friday

  • Japan Tokyo CBI, Friday

  • US Personal Spending and Income, University of Michigan Consumer Sentiment, Friday

  • Exxon Mobil earnings, Friday

Some key movements in the markets:

Shares

  • The S&P 500 was down 0.1% at 10:31 a.m. New York time

  • The Nasdaq 100 was little changed

  • The Dow Jones industrial average fell 0.2%

  • The Stoxx Europe 600 fell 0.3%

  • The MSCI world index fell 0.2%

Coins

  • The Bloomberg Dollar Spot Index fell 0.2%

  • The euro rose 0.3% to $1.0625

  • The British pound was up 0.3% at $1.2205

  • The Japanese yen was little changed at 149.88 per dollar

Cryptocurrencies

  • Bitcoin rose 2.7% to $30,657.14

  • Ether rose 2.3% to $1,678.24

Bonds

  • The yield on 10-year Treasuries fell two basis points to 4.89%.

  • Germany’s 10-year yield fell a basis point to 2.88%

  • Britain’s 10-year yield fell two basis points to 4.63%.

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materials

  • West Texas Intermediate crude was down 0.8% at $87.38 a barrel.

  • Gold futures fell 0.3% to $1,987.70 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Vildana Hajrik and Elina Bobina.

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