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Stock Market News for Oct 24, 2023

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Wall Street closed mixed on Monday as the benchmark 10-year treasury yield came down after briefly breaching the 5% mark. Investors continue to closely monitor the third-quarter earnings season as well as the economic metrics to gauge the Fed’s mood. Two of the three major stock indexes ended in the red, while one ended in the green.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.6% or 190.87 points to close at 32,936.41. Twenty components of the 30-stock index ended in negative territory, while 10 ended in positive.

The tech-heavy Nasdaq Composite added 34.52 points or 0.3% to close at 13,018.33, to snap four straight sessions of losses.

The S&P 500 lost 7.12 points, or 0.2%, to close at 4,217.04. Eight out of the 11 broad sectors of the benchmark index closed in the red. The Energy Select Sector SPDR (XLE), the Materials Select Sector SPDR (XLB) and the Real Estate Select Sector SPDR (XLRE) slid 1.6%, 1.1% and 0.9%, respectively, while the Communication Services Select Sector SPDR (XLC) advanced 0.5%.

The fear-gauge CBOE Volatility Index (VIX) decreased 6.2% to 20.37. A total of 10.8 billion shares were traded on Monday, higher than the last 20-session average of 10.7 billion. Decliners outnumbered advancers on the NYSE by a 2.10-to-1 ratio. On the Nasdaq, declining issues led advancers by 2.04-to-1.

Yield on 10-Year Treasury Note Climbs Back Down

The U.S. 10-year treasury yield rose early on Monday to peak at 5.02%, its highest level since July 2007. Yield on the benchmark treasury note has been recently on the rise, with investors betting that the Federal Reserve would keep interest rates at their current high levels for longer. Later in the session, the yield came back to close around 4.86%, providing some respite to the stock markets.

When the market is volatile, or the prospect of the economy does not seem rosy, investors usually flock to the bond market for safety. Interestingly, the Israel-Hamas conflict only briefly triggered a flight to treasuries this month but was quickly shrugged off as investors focused on the domestic factors.

What has actually pushed yields higher is a combination of resilient numbers coming in from multiple sectors of the economy, like the labor market and retail sales. Inflation has also remained high, keeping investors worried about how the Fed would interpret its current policy position. However, the biggest driver of bond yields in recent weeks has been the Fed minutes from September, which reveal that the Fed officials feel the need for and intend to keep interest rates at their current level or higher for longer than previously anticipated.

There is a rising feeling among investors that if this high interest rate regime continues, the central bank will not be successful in its bid to attain a soft landing for the economy. Currently, there is a general consensus that interest rates will be at 4.7% by the end of 2024 compared with expectations of a level of 4.2% at the start of September. However, treasury yields coming down from 16-year highs do provide a momentary respite.

Meanwhile, market participants keep a close watch on the big tech and heavy industrial names like Microsoft Corporation (MSFT - Free Report) , Amazon.com, Inc. (AMZN - Free Report) , Ford Motor Company (F - Free Report) and The Boeing Company (BA - Free Report) that are supposed to report in earnings later this week.

Energy became the biggest drag in the market on Monday. Consequently, shares of Marathon Oil Corporation (MRO - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) fell 1.1% and 3.6%, respectively. Marathon Oil carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

No economic data was released on Monday.

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