Last Updated: 4:02 PM EST
Stock indices finished today’s trading session mixed. The Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) fell 0.8% and 0.18%, respectively. Meanwhile, the Nasdaq 100 (NDX) gained 0.18%. Furthermore, the 10-year Government Bond yield climbed 11 basis points to 4.19% as investor sentiment around bond prices started to sour.
Indeed, earlier today, T. Rowe Price’s Arif Husain, who oversees $180 billion in fixed-income assets, predicted that 10-year Treasury yields could reach 5% within the next six months, according to a Bloomberg report. This could be driven by rising inflation concerns and growing fiscal spending by the U.S. Interestingly, this outlook contrasts the market’s expectations of lower yields following the Federal Reserve’s recent rate cut.
Husain pointed out that the market is being flooded with debt due to the government’s need to fund its deficit spending. However, an important negative catalyst is the Federal Reserve’s quantitative tightening program, which is reducing the overall demand for bonds and pushing yields higher. He also expects a steeper yield curve, as short-term rates remain limited by the possibility of small Fed rate cuts.
Interestingly, Minneapolis Fed President Neel Kashkari said today that he expects more modest interest rate cuts in the coming quarters after the 0.5% cut in September. Kashkari also pointed out that the labor market has remained strong despite aggressive rate hikes. This suggests that the neutral rate—where the Fed’s policy neither stimulates nor restrains growth—could be higher than previously thought and adds more weight to Husain’s argument.
First Published: 4:58 AM EST
U.S. stock futures traded mixed on Monday after a strong week for major indices. The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) indices notched their best weekly winning streaks of 2024, reaching new all-time highs on Friday. Futures on the S&P 500 and the Nasdaq 100 (NDX) were down 0.05% and 0.19%, respectively, at 4:45 a.m. EST, October 21, while Dow Jones futures were up 0.07%.
The stock market enjoyed a strong week, with the S&P 500 and Dow Jones gaining 0.85% and 0.96%, respectively. The Nasdaq Composite also rose by 0.80%. This positive momentum was driven by a wave of strong corporate earnings reports, with most companies exceeding analyst expectations. However, investors remained cautious due to the upcoming U.S. presidential election and escalating geopolitical tensions.
This week, investors will be closely watching the S&P Global Purchasing Managers Index (PMI) data, Durable Goods Orders, and reports on Existing and New Home Sales. These data points will provide further insights into the overall health of the economy and could influence market sentiment.
Additionally, several companies are scheduled to report their earnings results this week, including Tesla (TSLA), Coca-Cola (KO), 3M (MMM), General Motors (GM), ServiceNow (NOW), Colgate-Palmolive (CL), and Verizon (VZ).
Meanwhile, the U.S. 10-year treasury yield was up slightly at the time of writing, floating near 4.095%. At the same time, WTI crude oil futures trended higher, hovering near $69.68 per barrel as of the last check.
Elsewhere, European markets opened higher on Monday as investors evaluated the rising geopolitical tensions in the Middle East.
Asia-Pacific Markets Traded Mixed on Monday
Asia-Pacific indices traded mixed today. Chinese stocks continued their upward trajectory, following the People’s Bank of China’s decision to reduce both the one-year and five-year loan prime rates by 25 basis points. Conversely, political uncertainty ahead of Japan’s election weighed on the country’s stock market.
At the time of writing, Hong Kong’s Hang Seng index was down 1.58%. Further, Japan’s Nikkei 225 and Topix indices declined 0.07% and 0.34%, respectively. However, China’s Shenzhen Component and Shanghai Composite indices closed higher by 0.2% and 1.09%, respectively.
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