In a volatile trading session on Monday, U.S. equity indexes displayed a mixed performance amid fluctuating market conditions, as government bond yields continued their recent downtrend following a less-than-expected regional manufacturing report. The Nasdaq experienced an uptick of 0.4%, settling at 17,428.8, while the S&P 500 also rose by 0.3% to reach 5,473.6.
Conversely, the Dow Jones Industrial Average recorded a slight decline of 0.1%, finishing at 40,569.5. Early trading saw all three indexes start lower, yet a recovery ensued, particularly in sectors excluding energy and financials, with consumer discretionary and communication services emerging as frontrunners in terms of gains. Treasury yields opened Monday on a subdued note, most notably the 10-year yield, which decreased by 2.4 basis points to 4.18%.
This downward trend in Treasury yields follows an optimistic sentiment toward a potential interest-rate cut in September, a perspective bolstered by the Federal Reserve's favored inflation metric—the personal consumption expenditures index—which indicated moderation in June. Market participants are particularly attentive to the upcoming Fed interest-rate decision, scheduled for Wednesday, as signaled by a note from Stifel.
Market speculation suggests that the Fed will likely maintain the current rates for the eighth consecutive meeting. However, investors are keen to dissect the accompanying statement and closely analyze Fed Chair Jerome Powell’s press conference for any hints that may suggest a shift towards a rate cut in the near term. From a broader economic perspective, the Dallas Fed's monthly manufacturing index revealed a decline to -17.5 for July, down from -15.1 in June, representing a sharper contraction than anticipated, as per Bloomberg's survey—which predicted a reading of -15.5.
This contraction aligns with trends observed in other regional indicators, including those from Empire, Richmond, Kansas, and the S&P Global flash measures, while standing in stark contrast to the Philadelphia Fed Index, which indicated a slight expansion. Turning to company-specific news, ON Semiconductor's fiscal Q2 results significantly outperformed market expectations.
The chipmaker’s guidance for the ongoing quarter remained consistent with analysts' forecasts at the midpoint. As a result, ON Semiconductor's stock surged by 13% during intraday trading, positioning it as the top performer on both the S&P 500 and Nasdaq indices. In contrast, quarterly reports from technology giants Tesla and Alphabet disappointed investors last week, contributing to a downturn in both technology and communication services.
This has raised concerns about the sustainability of the rally that began last November in the S&P 500 and Nasdaq. Looking ahead, investors are particularly focused on the earnings reports of major companies scheduled for release this week, including Apple, Amazon.com, Microsoft, and Meta Platforms, with high expectations surrounding their performances. FactSet's blended Q2 earnings estimate indicates a promising increase of 9.8% year-over-year for S&P 500 companies, suggesting a positive trajectory for upcoming results.
As of June 30, consensus estimates projected an increase of approximately 8.8%. To date, 41% of S&P 500 firms have reported results, encompassing over 31% of the index's technology companies. On the commodities front, West Texas Intermediate crude oil saw a decline of 2.1%, now priced at $75.55 per barrel.
In precious metals, gold dipped by 0.2%, settling at $2,375.92 per ounce, while silver fell by 1%, trading at $27.75..