Stocks reversed losses Monday to finish higher, even as the burgeoning Middle East conflict added a dose of geopolitical risk to the interest rate and inflation concerns already facing markets.
At the close, the Dow Jones Industrial Average (^DJI) was up 0.6%, or almost 200 points. The S&P 500 (^GSPC) also gained about 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) edged up nearly 0.4%.
Islamist militant group Hamas launched a large-scale attack on Israel on Saturday, prompting a declaration of war in response. That has rattled markets, as investors worry that another full-blown conflict could join the war already being waged between Russia and Ukraine.
"Geopolitical risk doesn't tend to linger long in markets, but there are many second-order impacts that could come through in the weeks, months, and years ahead from this weekend's developments," Deutsche Bank strategist Jim Reid said.
Oil prices jumped to start the week amid speculation that key crude-producing countries in the region could be pulled into the fray. WTI crude oil futures (CL=F) and Brent crude futures (BZ=F) traded over 4% higher as fighting entered its third day. Meanwhile, safe havens gold (GC=F) and government bonds were in demand.
Defense-related stocks saw some of the biggest moves upward Monday. Lockheed Martin (LMT) was up almost 9%, Northrup Grumman (NOC) jumped over 11%, and General Dynamics (GD) rose over 8%, among others.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
Investors have been increasingly facing up to the reality that borrowing costs are likely to stay higher for longer, with the surprisingly hot September jobs report on Friday just the latest data to make the case for more restrictive policy.
The recent rise in bond yields to 16-year highs shook investors who were already worried about the impact on the economy of further rate hikes and put pressure on stocks.
But it could give the Fed a reason to pause hiking, given some of its officials believe the bond rout is likely to tighten credit considerably. Trading in US Treasuries was closed on Monday for the US holiday.
The next crucial economic indicator up is the Consumer Price Index (CPI) for September, due on Thursday and expected to show a small drop in headline inflation. The release this week of minutes from the Fed's last meeting should also provide more insight into policymakers' thinking about the path of interest rates.
After initially falling amid intensifying geopolitical tensions in the Middle East, stocks rebounded into the close on Monday as investors digested commentary from Federal Reserve officials that another interest rate hike may not be necessary.
The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) rose roughly 0.6%. The tech-heavy Nasdaq Composite (^IXIC) increased 0.4%.
Meanwhile, prices for West Texas Intermediate (CL=F) oil popped more than $3.50 a barrel to above $86, it’s largest single day increase since April.
Disney (DIS) shares hit a new nine-year low last week as the company grapples with various uncertainties from leadership unknowns to a potential asset sale — all while activist investor Nelson Peltz launches a renewed attack on the media giant.
First reported by The Wall Street Journal late Sunday, Yahoo Finance confirmed Peltz will seek multiple board seats, including one for himself, after his hedge fund Trian Fund Management boosted its stake in the company, which is now valued at a reported $2.5 billion for more than 30 million shares.
Disney shares rose about 2% on Monday following the news but were still trading near 52-week lows.
“It puts a lot of pressure [on Disney],” Needham analyst Laura Martin told Yahoo Finance Live on Monday.
She added Peltz will be “good for shareholders” in the short-term given his sharp focus on delivering value through more immediate strategies like asset sales.
“Nelson Peltz is going to try to disaggregate and sell off pieces much more aggressively, which will take better care of public shareholders in the near term,” she explained. “Disney just announced they’re going to spend $60 billion over 10 years on the parks. Bob Iger’s vision is more of a five to 10 year vision.”
Martin said she’s not sure if Peltz will ultimately need board seats “or just has to threaten a war” given his massive stake in the company.
“He owns enough that I don’t even know if he needs to get board seats to actually get something done here and make money on his investment. We’ll see. But worst case, you’ll have an activist in the boardroom who will be much more short-term focused than anyone currently on the board.”
Peltz ended his previous proxy battle against Disney in February after the company committed to various cost-cutting initiatives, which included layoffs, in addition to restructuring the business, establishing a succession planning committee, and revealing plans to reinstate its dividend by the end of the calendar year.
Peltz had said Iger needed to execute on his plan — but, with the stock trading at just below $85 a share, and falling more than 20% since the end of Pelt’z previous proxy battle, it’s clear more needs to be done.
Much of the market discussion over the past few weeks has been about soaring Treasury yields. Officials at the Federal Reserve have taken notice.
“Increases in real yields can arise from changes in investor’s attitudes toward risk and uncertainty,” Fed Vice Chair Philip Jefferson said. “Looking ahead, I will remain cognizant of the tightening in financial conditions through higher bond yields and will keep that in mind as I assess the future path of policy.”
Dallas Fed President Lorie Logan also noted higher Treasury yields could be contributing to tighter financial conditions. But what’s driving those yields higher will be the deciding factor for the Fed’s next move.
“Financial conditions have tightened notably in recent months,” Logan said in a speech on Monday. “But the reasons for the tightening matter. If long-term interest rates remain elevated because of higher term premiums, there may be less need to raise the fed funds rate. However, to the extent that strength in the economy is behind the increase in long-term interest rates, the FOMC may need to do more.”
San Francisco Fed President Mary Daly had suggested a similar concept last week.
“The bond market has tightened quite considerably over about 36 basis points since we met in September,” Daly said at the Economic Club of New York on Oct. 5. “That is equivalent to about a rate hike. So then the need to do tightening additionally is not there.”
Lockheed Martin (LMT) and RTX (RTX) led Yahoo Finance’s trending tickers page on Monday, the first day of trading since a surprise attack on Israel by the Palestinian Islamist group Hamas fueled concerns of broader conflict breaking out in the Middle East region. Lockheed Martin shares were up more than 8% while RTX stock gained about 4.5%.
Shares of Northrop Grumman Corporation (NOC), one of the world’s largest weapons manufacturers and military technology providers, rose amid the geopolitical tensions. After entering the week down more than 20% on the year, the stock rose more than 11% on Monday.
XPeng (XPENG) stock sank more than 11% during Monday’s trading session. On September 27, the EV-maker announced a deal to ship 750 vehicles to Israel, where a conflict has broken out with the Palestinian Islamist group Hamas.
Occidental Petroleum (OXY) shares rose more than a 4% on Monday as the conflict in the Middle East sent oil prices higher as investors feared a more widespread conflict could disrupt oil production and distribution.
The United Auto Workers strike has been underway for nearly four full weeks and the latest deal denial showed workers aren’t budging on many of their demands.
Yahoo Finance’s Pras Subramanian reports:
As United Auto Workers’ (UAW) negotiations with the Big Three — GM, Stellantis, and Ford — roll on, union members at Mack Trucks (VOLV-B.ST) made a bold move to reject a tentative deal with company management. This comes as Canada’s auto union, Unifor, says GM is making negotiations difficult, as a big deadline looms for tonight.
Late on Sunday, the UAW announced workers voted to reject a tentative agreement its negotiators made with the truckmaker with a 73% “no” vote, prompting workers to strike at 7 a.m. ET on Monday. “I’m inspired to see UAW members at Mack holding out for a better deal, and ready to stand up and walk off the job to win it,” UAW president Shawn Fain said via the UAW’s X account. The union has 4,000 workers at Mack Trucks plants in Pennsylvania, Florida, and Maryland,
In a letter to Martin Lundstedt, CEO of Volvo North America Trucks (which owns Mack), Fain stated the trucking company’s demands are similar to those of the Big Three, including cost of living allowances (COLA), wage progression, job security, pension, health care, and other issues.
“We clearly demonstrated our commitment to good faith bargaining by arriving at a tentative agreement that was endorsed by both the International UAW and the UAW Mack Truck Council,” Mack Trucks CEO Stephen Roy said. Roy added that he was “surprised and disappointed” by the vote to reject the deal, which included a 19% pay hike, a $3,500 ratification bonus, increased retirement benefits, additional vacation time, and a decrease in time for wage progression to top pay.
Meanwhile in Canada, the country’s Unifor auto workers union said GM (GM) was “resisting” a number of important elements that the union secured with Ford (F), with a strike deadline looming Monday night at 11:59 p.m ET.
Unifor, like the UAW in the US, uses a “pattern agreement” with one automaker to use as a template for the others. Unifor chose GM as its second target after Ford, to hammer out issues it has with the Detroit-based automaker using concessions gained from its Ford deal.
The three major averages are off their lows of the day as investors digest a developing conflict in the Middle East.
The Dow Jones Industrial Average (^DJI)was just above the flat line, while the S&P 500 (^GSPC) sat barely in the red. The tech-heavy Nasdaq Composite (^IXIC) slipped about 0.3%.
Major airlines sold off on Monday morning as rising oil prices and a growing conflict in the Middle East dominated investor sentiment.
United (UAL), Delta. (DAL) and American Airlines (AAL) were all off more than 5% around 11:30 a.m. ET on Tuesday. Rising oil prices over the last few months had already driven the airlines to slash their profit outlooks due to rising fuel costs.
Delta is expected to report earnings on Thursday.
Lockheed Martin (LMT) and RTX (RTX) led Yahoo Finance’s trending tickers page on Monday, the first day of trading since a surprise attack on Israel by the Palestinian Islamist group Hamas fueled concerns of broader conflict breaking out in the Middle East region. Lockheed Martin shares rose about 6% while RTX popped more than 3%.
Another aerospace defense stock, General Dynamics (GD), rose more than 6% on Monday morning.
Oil prices also popped following the unrest in the Middle East as fears swirled that the conflict could disrupt oil production. Energy companies rose on the news with Exon Mobile (XOM) up nearly 4% and Occidental Petroleum (OXY) up more than 3%.
Oil prices jumped nearly 4% Monday morning after a surprise attack on Israel by the Palestinian Islamist group Hamas fueled concerns of broader conflict breaking out in the Middle East region.
West Texas Intermediate (CL=F) and Brent International (BZ=F) futures jumped about 4% to about $86 a barrel and $88 per barrel, respectively.
Hamas over the weekend launched the biggest military assault on Israel in decades. Prime Minister Benjamin Netanyahu said on Monday that Israel’s response to the attack will “change the Middle East.”
The Middle East accounts for more than 30% of the world’s oil production.
“There has been no oil supply disruption,” Lipow Oil Associates President Andy Lipow wrote in a note on Monday morning. “The oil market knee jerk reaction is to move higher on the fear that the conflict will spread, eventually drawing Iran into the conflict and impacting the transit of oil through the Strait of Hormuz.”
Lipow notes that Iran’s involvement will be key in determining how much the conflict could impact oil prices. The Strait of Hormuz, which is located between Oman and Iran, produces 17-18 million barrels of oil per day. If closed, that could result in a $20 to $30 per barrel increase in oil prices and a surge in gasoline prices in America.
For now though, Lipow believes the conflict won’t impact gas prices’ path downward.
Stocks were in the red just after the opening bell on Monday after a surprise attack on Israel by the Palestinian Islamist group Hamas sparked fears of broader geopolitical risk to markets.
The Dow Jones Industrial Average (^DJI) fell 0.1%, while the S&P 500 (^GSPC) dropped 0.4% and the tech-heavy Nasdaq Composite (^IXIC) slipped about nearly 1%.
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Stocks rise, oil surges with focus on Middle East conflict: Stock market news today – Yahoo Finance
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