Stocks were mixed Monday as market participants geared up for more key third-quarter earnings reports this week. The Dow Jones Industrial Average sunk nearly 350 points in afternoon trading, while the S&P 500 Index lost about 0.2% and the Nasdaq Composite advanced roughly 0.3%.
Here's how the market settled on Monday:
S&P 500 Index (NYSE: SPY): -0.18% or -10.68 points to 5,853.99
Dow Jones Industrial Average (NYSE: DIA): -0.80% or -344.45 points to 42,931.46
Nasdaq Composite Index (NASDAQ: QQQ): +0.27% or +50.45 points to 18,540.01
In Focus:
Goldman Sachs sees just a 3% annual return over the next decade for the S&P 500, citing current market conditions that concentrate on a few stocks and high starting valuations. The S&P 500 returned 13% annually over the last 10 years, according to Goldman, above the index's historic average of 11%.
"The intuition for why concentration matters for long-term returns relates to growth in addition to valuation," the firm's equity strategy team led by David Kostin wrote. "Our historical analyses show that it is extremely difficult for any firm to maintain high levels of sales growth and profit margins over sustained periods of time."
FedWatch:
Dallas Federal Reserve President Lorie Logan said in remarks in New York on Monday that policymaker's recent policy decision was the right one to support the current economy, but the Fed should be cautious in further interest rate decisions.
"If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals," Logan said. "However, any number of shocks could influence what that path to normal will look like, how fast policy should move and where rates should settle. In my view, the [Federal Open Market Committee] will need to remain nimble and willing to adjust if appropriate."
In the News:
Boeing (NYSE: BA) and the International Association of Machinists and Aerospace Workers have reached a new contract proposal, the union announced Sunday, outlining a deal that could end the strike impacting the manufacturer's production output. The new contract includes 35% wage increases over four years, a higher signing bonus of $7,000, guaranteed minimum annual bonus payouts and higher 401(k) contributions.
Disney (NYSE: DIS) announced Monday James Goram will replace current Chair Mark Parker, effective in January, as the entertainment giant begins to look for a successor for CEO Bob Iger in early 2026.
"The Disney board has benefited tremendously from James gorman's expertise and guidance, as we are lucky to have him as our next chairman -- particularly as the board continue to move forward with the succession process," Iger said in a statement. "I'm extremely grateful to Mark Parker for his many years of board service and leadership, which have been so valuable to this company and its shareholders, and to me as CEO."
Barclays analyst Brandon Oglenski downgraded UPS (NYSE: UPS) on Monday to Underweight from Equal Weight, citing near-term risks that could make the shipping giant unable to meet "management's rather aggressive back half 2024 guidance." The analyst kept the firm's price target unchanged at $120, however, implying a 12% downside from UPS's Friday close.
"With the ecommerce provider operating a delivery network that rivals the size of UPS, we see insourcing risk remaining a large overhang in the years to come, especially as UPS attempts to extract higher pricing from the business," Oglenski wrote.
"Investors should consider future competition from a merged FedEx (NYSE: FDX) U.S. Express and Ground non-union operation, potentially rivaling or exceeding productivity of UPS, which will be constrained on a relative basis by union work rules as well as contracted wages and benefits."
Bernstein analyst Sara Russo lowered the firm's price target on ASML (NASDAQ: ASML) on Monday, but maintained its Outperform rate, lowering the target to $815 from $1,052 -- still implying a 13% upside. Russo cited normalizing demand in China in the near-term as the reason behind the decision.
"The recent de-rating has been more pronounced vs. history, with ASML now trading at a trough multiple1SD below historical average, which we believe is overdone," Russo wrote. "ASML is now trading at a discount to the SOX, which we find to be unmerited given our belief that the structural story remains strong."
For Tuesday:
Investors will turn their attention towards quarterly earnings reports from companies including Lockheed Martin (NYSE: LMT), RTX Corporation (NYSE: RTX), Texas Instruments (NYSE: TXN), Verizon (NYSE: VZ) and Philip Morris International on Tuesday.