Stocks finished mixed on Monday, with the Nasdaq leading the way to start a new quarter of trading after US lawmakers averted a government shutdown and as closely watched auto deliveries data rolled in.
The S&P 500 (^GSPC) turned just above the flatline at the close, and Dow Jones Industrial Average (^DJI) dropped about 0.2%. The tech-heavy Nasdaq Composite (^IXIC) was up roughly 0.7% as Goldman Sachs strategists said valuations in the sector were historically cheap.
In a surprise turnabout, Congress on Saturday sealed a last-second deal to sidestep a shutdown that had seemed all but inevitable. That brought some relief to investors concerned by the threat of significant harm to the economy and stock market. But as the agreement brought just a temporary extension to the budgetary wrangling, the relief could be just as short-lived.
The major gauges still face other headwinds that helped drag stocks to sharp losses for the quarter and month on Friday, with the Federal Reserve's message that rates will stay higher for longer ringing in investors' ears. Oil prices and Treasury yields (^TNX) are still rising and piling on pressure. The benchmark 10-year yield rose to sit just below 4.7% on Monday, hovering around more-than-15-year highs.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
On Monday, the ISM Manufacturing Index for September came in at 49. That was above analyst expectations, but readings below 50 suggest a contraction.
Also still hanging over markets is the United Auto Workers strike, which was extended to more Ford and GM plants on Friday. A deal between the UAW and Mack Trucks in their dispute on Sunday could provide reason for optimism.
Auto companies report deliveries for the third quarter this week, which should help the market gauge the impact of the strike action. Shares in Tesla (TSLA) reversed an early decline after the EV maker undershot analysts' estimates for deliveries, while rival Rivian's (RIVN) stock was also in focus as its figures beat expectations.
Elsewhere, the World Bank slashed its outlook for China's growth in 2024, even as it kept its forecast for 2023 unchanged, sparking worries about demand in the world's second-biggest economy.
Meanwhile, investors are counting down to the week's data highlight, the September US jobs report on Friday.
Stocks closed mixed on Monday with the Dow Jones Industrial Average (^DJI) leading the day’s declines, down 0.2%. In the final seconds of trading, the S&P 500 (^GSPC) flipped into positive territory to close just above the flatline while the tech-heavy Nasdaq Composite (^IXIC) was the only major index to close firmly in the green, up nearly 0.7%.
Striking Hollywood actors were set to meet with studios on Monday as the two sides restart negotiations on the heels of an epic conclusion to the writers strike last week.
SAG-AFTRA — the union that represents approximately 160,000 actors, announcers, recording artists, and other media professionals around the world — began a strike on July 14 after failing to negotiate a deal with the Alliance of Motion Picture and Television Producers (AMPTP), which bargains on behalf of the major studios including Warner Bros. (WBD), Disney (DIS), Netflix (NFLX), Amazon (AMZN), Apple (AAPL), NBCUniversal (CMCSA), Paramount (PARA), and Sony (SONY).
Similarly to the writers, SAG-AFTRA is fighting for more protections surrounding the role of artificial intelligence in media and entertainment in addition to better pay, improved working conditions, and higher streaming residuals as more movies and TV shows go directly to streaming.
Prior to Monday’s meeting, SAG AFTRA and the AMPTP had not held official talks since the strike first began.
Read more here.
It’s been well documented that the ‘Magnificent Seven’ stocks have driven much of the S&P 500’s gains this year.
They’ve also been leading the leg downward over the past month as the benchmark index just posted its worst monthly return of 2023. Some Wall Street strategists believe the losses could be healthy for the overall index.
“It wouldn’t surprise me to see a little bit more convergence,” Charles Schwab chief investment strategist Liz Ann Sonders told Yahoo Finance. “In fact I think it would be healthy for the market to have an environment like what began in early June where you started to see profit taking in that small group of stocks but at the same time you saw an improvement in breadth under the surface.”
Market breadth, meaning gains are being distributed across companies and not just from a select few names, is considered a key sign of health in the stock market. As Sonders explains, the Magnificent Seven companies are like generals leading an army. If the rest of the 493 companies, or the “soldiers,” don’t participate, the army will be inherently weaker no matter how strong the generals are.
“Even if the generals give back and step back from the front line if a bunch of soldiers are up there, it’s a stronger front,” Sonders added.
Read more here
Oil rallied an average of 28% last quarter to reach year-to-date highs but some on Wall Street don’t expect those prices to stick.
As Yahoo Finance’s Ines Ferré reports:
“We hold a bearish view on oil where we forecast Brent to average $82 in 4Q, and $74 for 2024,” wrote Citi’s global head of commodities research Ed Morse and his team.
Oil prices have been on an upward trend following OPEC+ production reductions and supply cuts by Saudi Arabia and Russia through year-end. Prices have also been supported by Russia limiting exports. This has driven “oil higher in a prolonged bull run, but 4Q’23 is set to move lower, with further 2024 downside,” reads the note.
On Monday, West Texas Intermediate (CL=F) pared earlier gains to close just below $90 per barrel. Brent International (BZ=F) futures hovered just above $95 per barrel.
Read more here.
Here are some of the stocks leading Yahoo Finance’s trending tickers page in afternoon trading on Monday
Rivian (RIVN): Shares fell more than 1% on production cost concerns despite the electric vehicle maker reporting a record number of EV deliveries in the third quarter.
Tesla (TSLA): Shares fell about 0.5% after the company reported third quarter delivery figures that missed the mark, as scheduled downtime at some of its plants shifted future production further into the fourth quarter.
Gamestop (GME): The meme darling saw shares fall 7% in afternoon trading on Monday after it named Ryan Cohen CEO last week. The stock is on track to close at its lowest level since February 2021.
3M (MMM): Shares sank about 3.5% as concerns continue to mount over PFAS, or “forever chemical,” exposure. The company had said it planned to discontinue its use in products by the end of 2025.
Stocks were mixed on Monday afternoon to start the first trading day of October as investors grappled with an averted government shutdown and continuing uncertainty about the impacts of the Fed’s fight against inflation.
The S&P 500 (^GSPC) decreased by about 0.5%, while the Dow Jones Industrial Average (^DJI) fell by 0.7% or about 200 points. The tech-heavy Nasdaq Composite (^IXIC) gained 0.2%
The costs of borrowing money has risen by the largest amount in nearly two decades, on a year-over-year basis, according to strategists at Goldman Sachs. And one consequence of the tightening campaign could be a hit to corporations’ long-term return on equity.
For decades, the low cost of interest and greater leverage taken on by corporations allowed S&P 500 firms to generate an increase in their return on equity. Cheap debt accounted for almost one-fifth of what the strategists said was an overall 8.8 percentage points increase in the return on equity. But the Fed’s tightening campaign, which is expected to last for several more years, could steer companies away from taking on more leverage, disrupting that historical dynamic.
“In the new ‘higher for longer’ rates environment, the key risk for S&P 500 ROE will be higher interest expenses and lower leverage,” wrote Goldman’s David Kostin wrote in the note published Friday. “A scenario in which interest expense and leverage persistently weigh on ROE would be a departure from the historical trend.”
The S&P has fallen more than 6% since August, coinciding with rising bond yields that elevate as borrowing costs increase.
President Joe Biden signed a temporary stopgap extension to avoid another government shutdown in a surprise turnabout following several days of pessimism that a deal would not happen.
The last-minute solution came after business leaders and economists had worried for weeks about the economic damage that a shutdown would unleash, especially during a time of uncertainty from the Fed’s fight to curb inflation to volatile energy prices.
But Wall Street’s collective sigh of relief was modest, with stocks mixed on Monday morning. And the measure served only to kick the can down the road as lawmakers now have about six weeks to search for another compromise before a new shutdown deadline of Nov. 17. And following that potential conflict, there is an even steeper fiscal deadline awaiting Washington on Jan. 1, 2024, when this summer’s debt ceiling deal stipulates that discretionary government spending will be cut by 1% if no overall budget deal in place.
As Yahoo Finance’s Brian Sozzi reports: “You will likely see a groundswell of Wall Street chatter on how this debt ceiling drama time and time again is slowly eroding confidence in the country. You will also probably hear fretting over the US credit rating and our bloated debt position in the context of fractured government.”
Here are some of the stocks leading Yahoo Finance’s trending tickers page in morning trading on Monday
Coinbase (COIN): The cryptocurrency exchange rose by 2% Monday morning after the company received the green light to offer payment services in Singapore. Coinbase said the Monetary Authority of Singapore granted the exchange a license to offer digital token payment services to both institutions and individual investors. Coinciding with the news, bitcoin (BTC-USD) rose 4% to trade above $28,000 for the first time since August.
Tilray: (TLRY): Shares of the cannabis-lifestyle and consumer packaged goods company lost more than 2% after it closed its all-cash acquisition of eight beer and beverage brands from Anheuser-Busch (BUD), including Shock Top and Blue Point Brewing Company. The move is part of the company’s diversification strategy and an effort to expand its capabilities for making cannabis-infused beverages. Tilray is scheduled to report earnings on Wednesday.
SmileDirectClub (SDC): Shares plunged more than 60% after the news, first reported by Yahoo Finance’s Brian Sozzi, that it had filed for Chapter 11 bankruptcy late Friday.
Wall Street kicked off a new month and new quarter with trepidation, with stocks just around the flatline after the federal government narrowly averted a shutdown over the weekend and investors tried to regroup after two months of losses.
The S&P 500 (^GSPC) decreased by 0.1%, while the Dow Jones Industrial Average (^DJI) fell by 0.2% or about 80 points. The tech-heavy Nasdaq Composite (^IXIC) gained 0.07%
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Nasdaq rises, Dow falls in seesaw start to Q4: Stock market news today – Yahoo Finance
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