On Monday, U.S. stocks experienced a rebound, with the Nasdaq Composite rising by 0.1%, while the S&P 500 and Dow Jones Industrial Average each recorded a slight dip of 0.1%. This recovery followed an initial drop in the market due to a spike in the 10-year Treasury yield over 5%, which later eased to 4.93%. Trading volumes on the Nasdaq increased, while those on the New York Stock Exchange (NYSE) decreased.
The bond market sell-off raised credit concerns and heightened tensions between Israel and Hamas escalated market risks. Despite these factors, U.S. crude oil prices dropped to $87.61 per barrel.
In corporate news, Chevron (NYSE:CVX)'s decision to acquire Hess (NYSE:HES) for $53 billion resulted in a 3% fall in Chevron's stock, while Hess shares remained stable. Meanwhile, Roche Holding (OTC:RHHBY) announced its acquisition of Telavant for $7.1 billion.
Looking ahead, investors are anticipating the upcoming earnings reports from the 'Magnificent 7' megacaps including Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), and Amazon.com (NASDAQ:AMZN).
The U.S. Treasury yields retreated with the 10-year yield at 4.91%, the 30-year yield at 5.04%, and the 2-year yield at 5.10%. The high yields, which reached a psychological level of 5%, were linked to uncertainty surrounding the Federal Reserve's policies according to Donovan from UBS. Spinozzi from Saco Bank predicts that these yields could rise to between 5.20% and 5.25%.
Reid from Deutsche Bank expressed concern about how markets might react to these high yields in the U.S., especially considering the potential pain from yield sell-offs in a market influenced by quantitative easing (QE) amidst an enormous global debt load.
Furthermore, political developments have also added to market risks. The U.S. House's lack of a speaker raises the risk of a government shutdown after Halloween, increasing the risk premium around such an event. The mix of quantitative tightening (QT) and strong government supply was also underscored as a significant factor.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.