US benchmark equity indexes experienced declines as oil prices surged intraday amidst ongoing uncertainty surrounding the geopolitical landscape of the Middle East. The Dow Jones Industrial Average dropped by 0.6%, settling at 42,091.9, while both the S&P 500 and Nasdaq Composite each fell by 0.5%, reaching 5,723.4 and 18,045.2, respectively.
Within these indexes, the utilities and consumer discretionary sectors experienced the most significant downturns, while only the energy and technology sectors reported gains. West Texas Intermediate crude oil saw a substantial increase of 3.6%, priced at $77.08 per barrel, with Brent crude exceeding $80.
This uptick in oil prices has been attributed to concerns regarding a potential escalation of conflict in the Middle East, which could disrupt exports from the crucial oil-producing region, as noted by D.A. Davidson in a recent communication to their clients. Looking ahead, official data expected on Thursday is projected to reveal a 0.1% increase in US consumer inflation on a monthly basis and a 2.3% year-over-year rise for last month, according to consensus estimates compiled by Bloomberg.
Additionally, the US producer prices report for September is due for release on Friday, adding further insights into economic trends. Further insights reveal that the US two-year yield saw an increase of four basis points to reach 3.97% intraday, while the 10-year yield experienced a rise of 3.5 basis points, elevating it to 4.01%. Data released on Friday by the Bureau of Labor Statistics indicated that the economy added more jobs than initially anticipated in September, with the unemployment rate exhibiting a decline.
"A significantly stronger-than-expected employment report not only raises questions about the Federal Reserve's recent substantial rate cut decision in September but also about the necessity of future rate cuts,” Stifel commented in a Monday client note. In September, the Federal Open Market Committee of the central bank opted to lower its benchmark lending rate by 50 basis points, contrasting with a Bloomberg consensus that suggested only a 25-basis-point reduction. In the realm of company news, shares of Deckers Outdoor ($DECK) faced a decline of 4.9%, representing one of the steepest drops within the S&P 500, following a downgrade of the stock from buy to neutral by Seaport Global.
Meanwhile, Constellation Brands' ($STZ) share price is anticipated to remain stable, with modest beer volumes contributing to a slower growth trajectory, as reported by BofA Securities; the company's shares were down by 1.9%. On the other hand, Super Micro Computer ($SMCI) shares surged by nearly 14%, marking it as the top performer on both the S&P 500 and Nasdaq after the company announced the deployment of over 100,000 graphics processing units in a single quarter. Gold prices noted a slight decrease of 0.1%, priced at $2,665.10 per troy ounce, while silver saw a drop of 1.1%, standing at $32.02 per ounce..