In midday trading on Monday, US equity indexes saw a decline, as surging government bond yields and crude oil futures impacted investor sentiment. The Nasdaq Composite slid 0.2% to 18,457.3 points, while the S&P 500 experienced a 0.4% drop to 5,840.6. Meanwhile, the Dow Jones Industrial Average marked a 0.7% decrease, settling at 42,949.3.
A notable observation was that all sectors, apart from technology, fell into the red during intraday trading, with the real estate sector emerging as the most significant decliner. Investors took a more cautious approach, particularly within the real estate sector. This shift was largely prompted by an increased likelihood of the Federal Reserve maintaining interest rates in their target range of 4.75% to 5% next month.
This probability rose to 15%, compared to 10% the previous day, with no chance of the Fed pausing their policy a month prior. The US Treasury yields commenced the week on a positive trajectory, with the 10-year yield soaring by 10.1 basis points, reaching 4.18%—its highest level since the end of July—a marker of rising confidence.
In a similar vein, the two-year yield streaked up by 6.8 basis points to 4.02%, reflecting investor sentiment about future rate hikes. Adding to the financial landscape, West Texas Intermediate crude oil was on the rise, climbing 1.8% to $70.50 per barrel. This increase follows China’s recent decision to lower interest rates, signaling attempts to stimulate its faltering economy.
As the world’s largest oil importer, China’s measures often influence global oil markets, pushing prices upward. From an economic perspective, the Conference Board's leading economic index recorded a decline of 0.5% in September. This figure lagged behind expectations for a more modest decrease of 0.3%, as articulated in a recent Bloomberg survey.
The month of August had similarly recorded a 0.3% drop, showing a trend of peripheral economic contraction. In terms of corporate news, Boeing’s striking machinists, represented by IAM District 751, are slated to vote on Wednesday regarding a new contract proposal. This proposal includes a notable pay increase of 35% spread over four years.
In an interesting development, shares of the aerospace giant surged by 3% intraday, making it the top gainer on the Dow for the day. Such moves underscore the volatility and responsiveness of the stock market to labor relations and broader economic factors..