Market sentiment shifted gears on Monday, as US stocks retreated and the 10-year Treasury yield surged past 4% for the first time since August. The Dow Jones Industrial Average dropped 0.9%, or around 400 points, after reaching a fresh record high last week. The S&P 500 and Nasdaq Composite followed suit, shedding almost 1% and 1.2%, respectively.
Big Tech names, including Amazon and Microsoft, led the decline, with Alphabet’s shares taking a hit after a judge ordered the company to open up its Google Play app store to more competition. Meanwhile, chip heavyweight Nvidia bucked the trend, rising over 2% to become the only gainer among the “Magnificent 7” stocks.
Oil prices jumped more than 3.5% on Monday, extending their biggest weekly gains in over a year, as traders priced in the potential impact of Israel’s response to Iran’s recent attack on its petroleum fields. Hurricane Milton’s upgrade to Category 5 status off the Gulf of Mexico also contributed to the surge in crude prices.
Insurance stocks took a hit as the storm headed towards the coast of Florida, with Allstate and Travelers dropping more than 3%. In contrast, Nvidia customer Super Micro Computer saw its shares soar as much as 17% after announcing shipment data, indicating strong demand for its high-end servers.
The 10-year Treasury yield remained above 4% during Monday’s session, as investors anticipated a smaller rate cut from the Federal Reserve following last week’s stronger-than-expected jobs report. Hopes for an outsized rate cut have largely dissipated, with traders now seeing an 88% chance of a 0.25% move, according to the CME FedWatch Tool.
In other news, consumer confidence in the housing market has reached a two-year high, with many expecting mortgage rates to fall in the next 12 months. However, only 19% of survey respondents think it’s a good time to buy a home now, near all-time lows.
Meanwhile, Trump Media & Technology Group’s shares surged about 15% after Elon Musk made a surprise appearance at Donald Trump’s rally in Pennsylvania, expressing support for the former president’s bid for re-election.
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