On Monday, U.S. benchmark equity indexes experienced a decline, while oil prices registered a notable increase, underlying the persistent uncertainty surrounding the geopolitical situation in the Middle East. The Nasdaq Composite fell 1.2% to 17,923.9, reflecting investor concerns about global stability.
Similarly, the S&P 500 saw a decrease of 1% to 5,695.9, and the Dow Jones Industrial Average dropped by 0.9% to 41,954.2. Within the sector performance, utilities faced the steepest decline with a 2.3% drop, whilst energy emerged as the sole gainer, benefiting from rising oil prices. West Texas Intermediate crude oil surged by 4%, reaching $77.35 a barrel, whereas Brent crude saw an increase of 3.9%, up to $81.10.
The escalation in oil prices is closely linked to concerns over potential Israeli retaliatory actions against Iran. Analysts, including those from Saxo Bank, have warned that an attack on Iran's oil and gas sector could lead to tighter supplies and potentially escalate conflicts in the already volatile region. In a related development, at least 10 firefighters tragically lost their lives in an Israeli airstrike on a border area in southern Lebanon, as reported by BBC News citing the Lebanese health ministry. Tensions further escalated last week when Iran launched a missile attack on Israel in response to the killing of Hezbollah chief Hassan Nasrallah and an Iranian commander in Lebanon by Israeli forces. In U.S.
economic news, the two-year Treasury yield rose by 5.9 basis points to 3.99%, while the yield on 10-year Treasuries increased by 4.3 basis points to 4.02%. This movement in Treasury yields reflects market sensitivity to potential inflationary pressures and upcoming Federal Reserve decisions. Official economic data set to release on Thursday is expected to indicate a 0.1% month-over-month rise in U.S.
consumer inflation, alongside an annual increase of 2.3%. The producer prices report for September is also anticipated to be published on Friday, which could further impact market sentiment. Adding to the economic narrative, recent data released by the Bureau of Labor Statistics showed that the job market added more positions than analysts had anticipated in September, with the unemployment rate showing a slight decline.
A significantly stronger-than-expected employment report raises questions about the Federal Reserve's recent decision to implement a substantial rate cut in September, as noted by Stifel in a client communication. Moreover, the Wells Fargo Investment Institute has expressed caution, suggesting that the market may be overly optimistic regarding the Fed's monetary policy easing, with futures markets expecting an additional 200 basis points of cuts by the end of 2025.
Last month, the FOMC made the decision to cut the benchmark lending rate by 50 basis points, contrasting with a consensus forecast for a 25 basis point reduction. In company-specific news, shares of Deckers Outdoor ($DECK) fell by 4.8%, marking one of the steepest declines on the S&P 500, following a downgrade by Seaport Global from buy to neutral.
Constellation Brands' ($STZ) shares are projected to remain range-bound amid lukewarm beer sales affecting growth trajectories, leading to a drop of 1.5% on Monday. Conversely, Super Micro Computer ($SMCI) witnessed a substantial surge in its stock, rising nearly 16% as it became the top performer on both the S&P 500 and Nasdaq after announcing the deployment of over 100,000 graphics processing units in a single quarter. In the commodities market, gold prices fell by 0.2% to $2,662.40 per troy ounce, while silver decreased by 1.3%, settling at $31.97 per ounce..