US stocks experienced a downturn on Monday, with the 10-year Treasury yield (^TNX) surpassing 4% for the first time since August, as investors brace for a week filled with crucial inflation data and the onset of the earnings season.
The Dow Jones Industrial Average (^DJI) dropped 0.9%, translating to a loss of approximately 400 points, following a record high reached at the end of last week. The S&P 500 (^GSPC) fell nearly 1%, while the Nasdaq Composite (^IXIC) declined close to 1.2%, led downward by major technology stocks.
The decline accelerated in the afternoon after a judge mandated that Alphabet (GOOG, GOOGL) must open its Google Play app store to increased competition. This news contributed to a more than 3% drop in Amazon (AMZN) and a decline of over 1.5% for Microsoft (MSFT). Chipmaker Nvidia (NVDA) was the sole gainer among the “Magnificent 7” tech stocks.
In the commodities market, oil futures surged more than 3.5%, extending the largest weekly gains seen in over a year. Traders are weighing the potential for Israel to target Iranian petroleum fields in response to recent attacks. Additionally, Hurricane Milton’s upgrade to Category 5 status in the Gulf of Mexico has contributed to rising crude prices. Meanwhile, insurance stocks suffered as the storm approached the Florida coastline.
Expectations for a significant rate cut from the Federal Reserve have diminished following a stronger-than-anticipated September jobs report, which alleviated concerns regarding the labor market. Traders have shifted their outlook from a potential 0.50% rate cut in November to now assign an 88% likelihood to a more modest 0.25% reduction, according to the CME FedWatch Tool.
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