The Dow Jones Industrial Average and the S&P 500 experienced declines from the record-high closings achieved on Friday, as investors interpreted the landscape before the impending release of financial results from prominent companies later this week. The Dow saw a decrease of 0.8%, closing at 42,931.6, while the S&P 500 fell by 0.2% to finish at 5,854.
In contrast, the Nasdaq Composite index recorded a minor increase of 0.3%, ending the day at 18,540. Excluding technology stocks, the remaining sectors of the market concluded lower, with the real estate sector leading the downward trend. A host of major companies are on the verge of releasing their quarterly results, including Tesla, Boeing, Coca-Cola, T-Mobile US, IBM, GE Aerospace, Philip Morris International, Verizon Communications, AT&T, Lockheed Martin, United Parcel Service, and Southwest Airlines, generating significant interest among market participants. In company-specific news, Microchip Technology's shares declined by 2.8%, marking it as one of the steepest losers on the Nasdaq.
This decline followed an adjustment by Susquehanna, which lowered the price target on Microchip Technology's stock from $105 to $95. Conversely, Boeing emerged as the top performer on the Dow and among the standout names on the S&P 500 with a 3.1% increase in its stock price. The aircraft manufacturer confirmed the establishment of a tentative labor agreement with the International Association of Machinists and Aerospace Workers union aimed at terminating an ongoing strike, a development announced over the weekend. Kenvue shares surged by 5.5% on Monday, positioning it as the best performer on the S&P 500.
Reports indicated that hedge fund Starboard Value had acquired a significant stake in Kenvue, suggesting a potential strategic pivot in the company's value trajectory. In the bond market, the US 10-year yield climbed by 11.9 basis points to settle at 4.19%, while the two-year yield increased by 7.2 basis points, rising to 4.03%.
Dallas Fed President Lorie Logan indicated that the Federal Reserve should consider a gradual reduction of its benchmark lending rate to mitigate inflation risks and support the labor market, contingent on projected economic developments. Despite the current robust economic environment, Logan acknowledged the presence of "meaningful" uncertainties in the macroeconomic outlook.
The risks to the labor market have intensified, while inflation still presents "diminished but real upside" challenges going forward. In the commodities market, West Texas Intermediate crude oil advanced by 1.6% to reach $70.36 a barrel. This increase follows the previous week’s significant drop of over 7%, which was largely prompted by concerns over demand in China alongside worries regarding supply disruptions in the Middle East. The Wells Fargo Investment Institute projected that losses attributed to Hurricanes Helene and Milton could total approximately $80 billion, potentially causing a 0.28% reduction in the US gross domestic product over the next two quarters.
Gold prices edged up by 0.2% to $2,734.30 per troy ounce, while silver demonstrated a more robust increase of 2.4%, landing at $34.02 per ounce..