Overview:
On Monday, October 7, 2024, U.S. stock markets declined, with all three major indices closing down approximately 1%. The market was weighed down by rising Treasury yields and heightened concerns over the ongoing Middle East conflict, which has continued to push up oil prices. The Dow Jones Industrial Average fell by 0.94% to 41,954.24, while the S&P 500 dropped 0.96% to 5,695.94, and the Nasdaq Composite lost 1.18%, closing at 17,923.90.
Investors remain cautious as they await the kickoff of the third-quarter earnings season later this week and the release of new economic data, including the Consumer Price Index (CPI) report for September. Meanwhile, traders scaled back their expectations of aggressive interest-rate cuts by the Federal Reserve, further contributing to the market’s decline.
Fear & Greed Index:
Fear – Rising oil prices, geopolitical tensions, and reduced expectations of a Federal Reserve rate cut pushed investors toward a more risk-averse stance.
Key Indices (Closed Prices):
- Dow Jones Industrial Average: -0.94% at 41,954.24
- S&P 500: -0.96% at 5,695.94
- Nasdaq Composite: -1.18% at 17,923.90
Sector Performance:
Winners:
- Energy: The S&P energy index rose 0.4%, buoyed by a 3.7% increase in oil prices due to supply disruption fears stemming from the Middle East conflict.
Losers:
- Utilities: The S&P utilities sector was the worst performer, falling 2.3%, as rising bond yields pressured interest-rate-sensitive sectors.
- Communications Services: This sector saw significant losses, driven by Alphabet’s 2.5% drop following a U.S. court ruling that called for the overhaul of Google’s mobile-app business.
Key Movers:
- Apple (AAPL): Fell 2.3% after Jefferies assumed coverage with a “hold” rating, contributing to the Nasdaq’s overall decline.
- Amazon (AMZN): Dropped 3% after a downgrade from Wells Fargo, further pressuring the tech-heavy index.
- Generac Holdings (GNRC): Surged 8.52% as demand for backup power generators rose due to an impending hurricane, making it one of the top performers in the S&P 500.
- Air Products and Chemicals (APD): Climbed 9.5% after reports that hedge fund Mantle Ridge had taken a stake in the company.
- Pfizer (PFE): Gained 2% after activist investor Starboard Value took a $1-billion stake in the pharmaceutical company.
Economic Data:
- Interest Rate Expectations: Following last week’s stronger-than-expected jobs report, traders are now pricing in an 86% chance of a 25-basis-point rate cut at the Fed’s November meeting, and a 14% chance of no rate cut at all. This shift in sentiment has driven Treasury yields above 4% for the first time in two months.
- Middle East Conflict: Investors remain on edge about the economic impact of rising oil prices due to escalating tensions between Israel and Hezbollah, which fired rockets at the Israeli city of Haifa on Monday.
Outlook:
As investors brace for third-quarter earnings reports, attention will turn to the financial sector, with JP Morgan Chase, Wells Fargo, and BlackRock set to report later this week. The Consumer Price Index (CPI) inflation reading, also expected this week, will likely provide further insights into the Federal Reserve’s upcoming interest-rate decisions. With geopolitical tensions, rising oil prices, and inflation concerns dominating the market, volatility is expected to remain high in the coming days.