georgeclerk
U.S. stocks on Monday ended solidly higher while bonds sold-off, as investors turned their attention to the third quarter earnings season which will begin in earnest this week. Wall Street’s benchmark S&P 500 (SP500) is coming off back-to-back weekly gains.
WTI crude oil futures (CL1:COM) slipped after last week’s surge, with market participants keeping a close eye on the ongoing conflict between Israel and Islamist group Hamas.
Cryptocurrencies garnered some attention, with bitcoin (BTC-USD) up more than 5% after a report that the U.S. Securities and Exchange Commission (SEC) had decided not to appeal a ruling that overturned its rejection of Grayscale’s bid to launch a bitcoin ETF. Furthermore, Bloomberg News reported that BlackRock’s application for an ETF was still under review by the SEC.
The Nasdaq Composite (COMP.IND) led the major averages, adding 1.20% to close at 13,567.98 points. The S&P (SP500) gained 1.06% to settle at 4,373.64 points, while the blue-chip Dow (DJI) advanced 0.93% to finish at 33,984.60 points.
All 11 S&P sectors ended in positive territory, led by Consumer Discretionary and Communication Services.
Treasury yields were higher. The longer-end 30-year yield (US30Y) was up 8 basis points to 4.86%, while the 10-year yield (US10Y) was also up 8 basis points to 4.71%. The more rate-sensitive 2-year yield (US2Y) was up 5 basis points to 5.10%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
The spotlight in the coming days will be on quarterly results from several major companies, including Goldman Sachs (GS), Johnson & Johnson (JNJ), Netflix (NFLX) and Tesla (TSLA). The last two names could have the biggest impact on the overall market, given their size.
“Major U.S. equity indices shook off a surge higher in long-duration Treasury yields in today’s session, with all 11 sectors of the S&P 500 (SP500) closing firmly in the green,” Ahan Vashi, investing group leader of The Quantamental Investor, told Seeking Alpha. “While the Q3 earnings season got off to a strong start last week with decent reports from the big banks, the near-term outlook for equity markets remains reliant on ‘Magnificent 7’ big tech reports given their heavy weighting in the indices and year-to-date returns.”
“Higher yields render stocks less attractive, and mega-cap tech names look set for disappointment given the entire rally off of the October 2022 bottom has been based on trading multiple (P/E) expansion. In our view, prudent investors must continue to remain cautious on richly valued equities and remain highly selective,” Vashi added.
Equities ended last week with a mixed performance, with the S&P 500 (SP500) eking out gains of 0.45%. The index was helped by comments from several Federal Reserve officials which suggested that the central bank could hold rates steady in light of the massive jump in Treasury yields. Those remarks helped offset hotter-than-expected producer and consumer inflation data along with geopolitical concerns spurred by Hamas’ attack on Israel.
Turning to Monday’s active movers, Charles Schwab (SCHW) gained after the brokerage firm delivered a quarterly earnings beat and its finance chief said outflows were starting to ease.