US stocks slipped on Monday afternoon as the 10-year Treasury yield (^TNX) jumped past 4% for the first time since August ahead of a week of key inflation data and the start of earnings season.
The Dow Jones Industrial Average (^DJI) fell 1.2%, around 400 points, after notching a fresh record high as stocks soared to close last week. The S&P 500 (^GSPC) shed more than 1%, while the tech-heavy Nasdaq Composite (^IXIC) also dropped more than 1.1%.
Stocks sank to session lows with roughly one hour of trading left after a judge ordered Alphabet (GOOG, GOOGL) to open up Google’s app store business, Google Play, to more competition. Alphabet shares sank more than 2% amid the ruling.
Oil futures jumped more than 3.5% on Monday, extending their biggest weekly gains in over a year as traders price in whether Israel’s expected response to Iran’s recent attack will involve targeting the country’s petroleum fields.
Hurricane Milton’s upgrade to Category 5 status off the Gulf of Mexico also helped fuel higher crude prices. Meanwhile, insurance stocks fell as the storm headed toward the coast of Florida.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Meanwhile, hopes for an outsized rate cut from the Federal Reserve have melted away after a better-than-expected September jobs report dispelled concerns about cracks in the labor market. Traders have abandoned last week’s bets on a 0.50% rate cut in November and now see an 88% chance of a 0.25% move, according to the CME FedWatch Tool.
Those convictions will be tested later this week, primarily with key consumer inflation data coming on Thursday.
The wait is now on for the October consumer inflation report due Thursday to provide fresh insight into whether the Fed is making progress on bringing already-cooling price pressures down to its 2% target.
The start of third quarter earnings is in focus as Goldman Sachs (GS) raised its target for the S&P 500, saying it expects higher margin growth for corporate companies. After Pepsi (PEP) results on Tuesday, the season gets underway in earnest on Friday with reports from big banks JPMorgan (JPM), Wells Fargo (WFC), and BlackRock (BLK).
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Alphabet drops 2% following Google app store injunction
Alphabet (GOOG, GOOGL) stock sank more than 2% on Monday after a judge ordered the tech giant to open up Google’s app store business, Google Play, to more competition.
The judge laid out changes Google must make, including allowing Android applications from competitor sources.
The injunction stems from a lawsuit filed in 2020 alleging that Google squashed competition competition via distribution and payment App store controls.
Apple stock downgraded by Jefferies, which says ‘serious AI’ smartphones are 2 years away
Yahoo Finance’s Laura Bratton reports:
Apple (AAPL) was downgraded from Buy to Hold by Jefferies analyst Edison Lee, citing concerns over inflated expectations for its new AI-enabled iPhones.
Lee said smartphone hardware is not yet advanced enough to accommodate the kind of high-tech artificial intelligence analysts and iPhone consumers are hoping for.
“Near-term expectations for iPhone 16 and even 17 are too high,” Lee wrote in a note to investors Sunday night.
Read more here.
Consumers are growing more optimistic about the housing market
Yahoo FInance’s Claire Boston reports
Consumers are more confident about the housing market than they’ve been in two years, with many expecting mortgage rates to fall in the next 12 months.
The Fannie Mae Home Purchase Sentiment Index rose 1.8 points in September to 73.9, its highest reading in more than two years, according to data released Monday. The index is up more than 9 points from the same period a year ago.
A record 42% of survey respondents expect mortgage rates to fall in the next 12 months, up from 39% a month earlier. Even so, only 19% think it’s a good time to buy a home now, near all-time lows.
Read more here.
Dow component Travelers sinks along with other insurers as Hurricane Milton strengthens to Category 5
Insurance stocks sank on Monday as Milton strengthened to a Category 5 hurricane, threatening the gulf of Mexico, headed towards Florida.
Insurers Allstate (ALL) and Dow (^DJI) component Travelers (TRV) both dropped more than 3%.
Florida-based Universal Insurance (UVE) was down more than 18%.
Meanwhile crude futures extended gains, up more than 3% as the markets awaited Israel’s retaliation towards oil producer Iran following last week’s missile attack.
Chevron (CVX) said it evacuated all personnel from its Blind Faith platform in the U.S. Gulf of Mexico and shut-in the facility in preparation for Hurricane Milton.
Google is about to learn how DOJ wants to remake its empire
Yahoo Finance’s Alexis Keenan reports:
Google (GOOG, GOOGL) is about to find out what the Justice Department believes should be done to dismantle the tech giant’s dominance of the online search market.
Prosecutors are expected to submit a document as early as Tuesday in federal court outlining potential remedies after successfully arguing in a landmark trial that Google acted as an illegal monopoly.
Read more here.
DJT stock surges after Elon Musk appears at Trump rally
Shares of Trump Media & Technology Group (DJT) surged about 15% on Monday after Elon Musk made a surprise appearance at Donald Trump’s rally in Butler, Pennsylvania over the weekend — the same location the former president survived an assassination attempt in July.
The tech billionaire, who serves as the CEO of Tesla (TSLA) and SpaceX and also owns social media platform X (formerly Twitter), has been outspoken about his support of Trump ahead of next month’s election. Trump has even said he would consider a cabinet position for Musk but that the businessman likely would not be able to serve “with all the things he’s got going on.”
At Saturday’s rally, Musk told the crowd that Trump is the only candidate who can “preserve democracy in America,” adding this will be “the last election” if Trump does not win.
The former president remains in a deadlocked race against current vice president and Democratic nominee Kamala Harris, who just embarked on a flurry of media appearances in an attempt to solidify recent momentum in the polls.
Harris appeared on an episode of “Call Her Daddy,” a popular podcast catered toward Generation Z, along with a sit-down interview for “60 Minutes.”
Read more here.
Super Micro Computer stock surges on AI server demand
Nvidia (NVDA) customer and AI server maker Super Micro Computer (SMCI) jumped as much as 17% Monday after the company announced shipment data.
Super Micro Computer said Monday morning that it’s shipped over 2,000 of its high-end servers to large-scale AI data centers since June. The company said it’s now selling servers using over 100,000 AI chips per quarter — a sign that there’s no near-term slow down in AI demand, as analysts and investors have feared. The server maker said it’s selling its hardware to “some of the largest AI factories ever built.”
Super Micro’s stock climb on Monday is helping it recover from a downturn in late September, when shares fell 15% following reports that the company was being probed by the US Department of Justice over possible accounting violations.
Super Micro stock surged at the beginning of 2024 as Big Tech has rushed to create new generative artificial intelligence technologies with ever-increasing energy demands. The stock has tumbled since reaching highs near $120 per share in March.
Oil extends gains, up 2% as market awaits Israeli retaliation against Iran
Oil extended its gains on Monday following its biggest weekly gain in more than a year in anticipation of an Israeli retaliation against Iran for last week’s missile strike.
West Texas Intermediate futures (CL=F) advanced more than 2% to trade above $76 per barrel after gaining more than 9% last week. Brent crude futures (BZ=F), the international benchmark, also rose more 2% to touch $80 per barrel for the first time since August.
Tel Aviv has vowed to strike back after Iran launched some 200 ballistic missiles toward Israel on Tuesday. Traders have been pricing in the chances that a response will target Iran’s oil infrastructure.
“The Iranian military has responded by saying any attack from Israel would trigger yet a stronger response from Iran, so the Geopolitical stages effect on crude continues to grow,” Dennis Kissler, BOK Financial’s senior vice president of trading, wrote on Monday.
Nvidia (NVDA) and Amazon (AMZN), two of the ‘Magnificent Seven’ megacap tech stocks, were moving in opposite directions on Monday.
Chip heavyweight Nvidia rose more than 1% to trade above $126 per share.
E-commerce and cloud giant Amazon fell more than 2% after Wells Fargo downgraded the stock to Equal-weight from Overweight amid the expectation that advertising revenue will moderate.
Growth in Amazon’s cloud unit isn’t likely to make up for margin headwinds, according to Wells Fargo analyst Ken Gawrelski. “AWS strength alone is not enough,” he wrote.
Stocks open lower as 10-year Treasury yield tops 4%
The major averages opened lower on Monday as the 10-year Treasury yield (^TNX) rose back above 4%.
The Dow Jones Industrial Average (^DJI) fell about 0.3% after notching a fresh record high on Friday. The S&P 500 (^GSPC) shed roughly 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.5%.
The yield on the benchmark 10-year Treasury (^TNX) hit 4% for the first time since August, as hopes of another 50 basis point rate cut from the Federal Reserve faded after a stronger-than-expected September jobs report.
Oil prices extended gains on Monday following their biggest weekly increase in more than a year as markets awaited an Israeli retaliation against Iran over its missile barrage last week.
West Texas Intermediate crude futures (CL=F) advanced more than 1% to trade above $75 per barrel, after gaining more than 9% last week. Brent futures (BZ=F), the international benchmark, also advanced more than 1% to trade above $79 per barrel.
Pfizer stock jumps on reports of Starboard taking $1 billion stake
Pfizer (PFE) stock rose 2.6% premarket Monday as investors reacted to multiple media reports that activist investor Starboard Value has taken a $1 billion stake in the pharmaceutical giant.
Starboard has approached Pfizer executives Ian Read and Frank D’Amelio about helping turn the tides at the drugmaker, various media outlets reported, citing unnamed sources. Pfizer, the manufacturer of the world’s first-approved COVID-19 vaccine, has struggled to maintain its dominance post-pandemic. Read and D’Amelio expressed interest in assisting Starboard, The Wall Street Journal reported. Starboard’s plans and the changes it would make at Pfizer are unclear.
The stock’s moves early Monday morning will bring it into the positive for the year, but shares are far below record highs of nearly $60 in 2022.
Pfizer is set to report earnings on Oct. 29. Wall Street analysts expect the company to report revenues of $14.8 billion, up about 12% from the prior year. Only half of analysts covering the stock recommend buying it, according to Bloomberg data.
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