Market in the Red After Treasury Yields Climb, Geopolitical Tensions Escalate | Wall Street Today
RECAP
Indexes opened green after an Iranian strike on Israel failed to cause widespread damage Saturday night, but stocks sold off big time in the afternoon on news that Israel would respond soon. Investors pulled back after 1 PM EST, and Treasury yields jumped by nearly 5% while the market sank.
With preliminary closing numbers, the $S&P 500 Index fell 1.20%, the $Dow Jones Industrial Average fell 0.65%, and the $Nasdaq Composite Index fell 1.79%.
MACRO
Treasury Yields Rise as U.S. Data Remain Solid
The U.S. bond market's sharp selloff on Monday might be a surprise, given that Middle East tensions as recent as Friday were credited with sparking a flight to safe-haven assets.
$U.S. 2-Year Treasury Notes Yield(US2Y.BD$ climbed to 4.92%, while the $U.S. 10-Year Treasury Notes Yield(US10Y.BD$ grew 1.85% to 4.6%.
Analysts worry that rising oil prices and war in the middle east would make inflation harder to tame.
"It's kind of curious when there's a military conflict in the Middle East, and 10-year yields are back up," said Julie Biel, chief market strategist at Kayne Anderson Rudnick. There is probably a recognition that, given the good retail sales, the Fed is going to continue holding off on cutting rates."
Investors are digesting macroeconomic inflation data from last week, including a hotter-than-expected CPI and PPI that was on the trend lower.
Investors can expect a wealth of commentary from Fed members through speeches and appearances this week. The boring Fed beige book, a report highlighting economics updates from each Federal Reserve district, comes out Wednesday.
SECTORS
Oil futures fell slightly after the conflict in the Middle East did not ignite after Iranian drone and missile strikes aimed at Israel did not damage the country. The attack came two weeks after an Israeli attack stuck an embassy in Syria, killing Iranian military Leaders. The U.S. Secretary of State office said that 99% of the 300 missiles and drones were successfully shot down by the U.S., French, UK, and Jordan Air defenses before hitting targets.
Though Iran has announced the retaliation has ended, for now, Israeli leaders stated they would respond in kind, and the market awaits further conflict.
On news of war and conflict, gold futures hit an all-time high again, settling at $2,383 an ounce.
MOOVERS
$M&T Bank was the largest gainer on the S&P 500 at a 4.7% climb following its Q1 earnings, leading the pack for other financial stocks reporting. The bank's net income fell due to its commercial loans, but its 2024 predictions sent the stock into the green. $Charles Schwabgrew by 3% after their earnings, and $Goldman Sachsclimbed about 3% after reporting earnings that exceeded expectations.
Tesla to Lay Off More Than 10% of Workforce, Musk Tells Staff in Email
$Tesla(TSLA.US$fell 5.59% after Musk said it will cut more than 10% of its workforce globally as the company grapples with dimming growth prospects amid an overall slowdown in the growth of electric vehicle sales.
Salesforce Drops on Acquisition News
$Salesforce was the largest decliner on the S&P, down 7.2% after a rumor the company was looking at purchasing Informatica, a cloud data company. Informatica fell 8% because the secret buyout price was reportedly below the current stock price.
Lockheed Martin Secures Large Contact
$Lockheed Martin(LMT.US$ has been awarded a $17 billion contract from the US Missile Defense Agency to develop next-generation interceptors to defend against intercontinental ballistic missile attacks, Reuters reported Monday, citing two industry sources briefed on the matter.
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Source: Bloomberg, Dow Jones, CNBC, Reuters
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Disclaimer: This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Indexes are unmanaged and cannot be directly invested in. Past performance is no indication of future results. Investing involves risk and the potential to lose principal. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information regarding your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty regarding its adequacy, completeness, accuracy, or timeliness for any purpose of the above content. See thislinkfor more information.
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DudeThatsDerpy : Logistically, if war leads to oil supply shocks this would likely lead to inflation. Bonds may be predicting this, demanding a higher rate for their capital.
amusing Wolverine : yield is still high