U.S. stocks concluded Monday’s trading session with a mixed performance as benchmark U.S. Treasury yields retreated from the 5% mark. Investors redirected their attention towards this week’s highly anticipated corporate earnings reports and closely monitored economic data.
The S&P 500 index saw a modest decline, while a selection of interest rate-sensitive momentum stocks lifted the tech-heavy Nasdaq Composite Index to a higher close. However, the Dow Jones Industrial Average recorded its fourth consecutive daily decline.
“The primary focus continues to be on interest rates, transitioning from the idea of ‘higher for longer’ to ‘how much higher for how much longer?'” said Oliver Pursche, Senior Vice President at Wealthspire Advisors in New York. “The market has acknowledged that the Federal Reserve is not expected to lower rates anytime soon.”
The Nasdaq, heavily weighted with tech stocks, achieved the most significant gains among Wall Street’s major indices, while the Dow, comprising blue-chip companies, saw a nominal decline.
The S&P 500 closed below its 200-day moving average, a closely observed technical indicator, for the second consecutive session.
The upcoming week promises to be eventful in terms of earnings, with reports expected from nearly one-third of the companies in the S&P 500. Notable entities among them are technology giants such as Microsoft Corp (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL) Inc, Meta Platforms Inc (NASDAQ: META), and Amazon.com (NASDAQ: AMZN), as well as heavyweight industrial players like General Motors Co (NYSE: GM), Ford Motor Co (NYSE: F), and Boeing Co (NYSE: BA).
Sam Stovall, Chief Investment Strategist at CFRA Research in New York, commented, “With nearly a third of the S&P reporting this week, investors are hopeful that these ‘magnificent seven’ companies will deliver positive surprises.”
As of now, 86 companies in the S&P 500 have reported earnings, with 78% of them exceeding expectations, according to LSEG data.
Analysts project that S&P 500 earnings for the July-September period will grow by 1.2% year-on-year, slightly below the 1.6% growth initially anticipated at the beginning of the month, as reported by LSEG.
On Thursday, the Commerce Department will release the third-quarter gross domestic product (GDP) data, expected to show growth at a rate of 4.3%. Additionally, the wide-ranging Personal Consumption Expenditures (PCE) report, set for release on Friday, is anticipated to indicate a cooling of annual headline and core inflation to 3.4% and 3.7%, respectively.
“The Federal Reserve aims to curb inflation at a faster pace than it hinders economic growth, and it’s on track to do so,” added Pursche. “This aligns with the classic definition of a ‘soft landing.'”
Geopolitical instability remains a concern, with market participants monitoring potential developments in the Israel-Hamas conflict for signs of escalation.
On Monday, the Dow Jones Industrial Average declined by 190.87 points, representing a 0.58% decrease to close at 32,936.41. The S&P 500 also saw a minor decline of 7.12 points, or 0.17%, closing at 4,217.04, while the Nasdaq Composite added 34.52 points, or 0.27%, concluding at 13,018.33.
Among the 11 major sectors in the S&P 500, communication services recorded the most significant gains, while energy shares experienced the largest percentage drop.
Walgreens Boots Alliance (NASDAQ: WBA) saw a notable increase of 3.3% after J.P. Morgan upgraded the pharmacy chain operator from “neutral” to “overweight.”
Chevron (NYSE: CVX) declined by 3.7% after announcing its acquisition of smaller rival Hess Corp (NYSE: HES) in a $53 billion all-stock deal. Hess shares dipped by 1.1%.
FMC (NYSE: FMC), an agricultural sciences firm, experienced a substantial drop of 13.2% after revising its third-quarter guidance.
Declining issues outnumbered advancers on the NYSE with a ratio of 2.10-to-1, while on Nasdaq, the ratio favored decliners at 2.04-to-1.
The S&P 500 posted one new 52-week high and 58 new lows, while the Nasdaq Composite recorded 14 new highs and 514 new lows.
Total trading volume on U.S. exchanges reached 10.80 billion shares, slightly higher than the 10.67 billion shares recorded on average for the last 20 trading days.
