Stocks were mixed Monday as U.S. Treasury yields rose and market participants geared up for a busy week of corporate earnings. The Dow Jones Industrial Average fell nearly 200 points, while the S&P 500 Index lost about 0.2% and Nasdaq Composite added nearly 0.3%.
Here's how the market settled on Monday:
S&P 500 Index (NYSE: SPY): -0.17% or -7.12 points to 4,217.04
Dow Jones Industrial Average (NYSE: DIA): -0.58% or -190.87 points to 32,936.41
Nasdaq Composite Index (NASDAQ: QQQ): +0.27% or +34.52 points to 13,018.33
The benchmark 10-year Treasury yield briefly topped 5% again on Monday, marking the second time the yield broke above that level since July 2007 on Thursday when Federal Reserve Chair Jerome Powell signaled that further tightening of monetary policy may be needed to tame inflation.
Bank of America economist Michael Gapen said in a client note Monday that the central bank could issue one last interest rate hike in its December meeting, expecting policymakers to hold interest rates at their current level in their upcoming November decision.
"We shift the last rate hike in our forecast out to December. We think the strong September data keep another hike in play. But it is a close call," Gapen said. "There are meaningful risks that the Fed will either delay the last hike into 2024 or not hike again."
Wall Street is coming off a losing week on Monday, with the Dow ending the week 1.6% lower and the S&P 500 closing down 2.4%. The tech-heavy Nasdaq underperformed the broader market, dropping 3.2% for its second negative week in a row.
The week ahead is set to be one of the busiest weeks for the third-quarter earnings season, with 40% of the S&P 500 scheduled to report, according to Bank of America Head of U.S. Equity and Quantitative Strategy Savita Subramanian. In a Sunday note, Subramanian said the current earnings season has so far topped the previous quarter in terms of top-line estimate beats but has offered disappointing guidance.
"Cuts to outlook could be offset by better results and outlook at cyclicals benefitting from resilient manufacturing and consumption," Subramanian said.
Major releases include Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), General Electric (NYSE: GE), 3M (NYSE: MMM) and General Motors (NYSE: GM) on Tuesday, Meta Platforms (NASDAQ: META) and Boeing (NYSE: BA) on Wednesday, and Amazon (NASDAQ: AMZN) and Ford (NYSE: F) on Thursday.
For news on Monday, Chevron (NYSE: CVX) announced the oil giant plans to purchase Hess (NYSE: HES) for $53 billion in an all-stock deal. The deal is expected to close in the first half of 2024, and values Hess at $171 per share. This major oil merger is the second among the biggest U.S. oil companies in recent weeks, with Exxon Mobil (NYSE: XOM) planned to purchase Pioneer Natural Resources (NYSE: PXD) for $60 million earlier this month.
The United Auto Workers (UAW) union announced on Monday it is expanding its strike to Stellantis' (NYSE: STLA) Sterling Heights Assembly Plant in Detroit, Michigan, adding roughly 6,800 workers to its ongoing strike against Detroit automakers.
"Currently, Stellantis has the worst proposal on the table regarding wage progression, temporary worker pay and conversion to full-time, cost-of-living adjustments (COLA), and more," the UAW said in a release.
Tesla (NASDAQ: TSLA) shares came under pressure after the electric carmaker said in a new filing with the U.S. Securities and Exchange Commission (SEC) that its capital expenditures target for the year is expected to surpass the $9 billion previously forecasted. The company also revealed that the U.S. Department of Justice has asked for documents and information related to its driver assistance system, Autopilot.
For Tuesday, market participants will react to the latest earnings reports, as well as new economic readings for services and manufacturing PMI for October.