Today’s session on Wall Street ended on a mixed note, with investors hedging their bets on quick interest rate cuts, after a series of statistics showed that the US economy remains resilient.
THE S&P 500 ended the session with a marginal drop of 0.05%, at 5,851.20 units, while Dow Jones Index fell 6.71 points or 0.02% to 42,924.89 points, after initially falling 213.34 points or 0.5%. However, the Nasdaq reinforced by 0.18% to 18,573.13 units.
The US 10-year Treasury yield rose above 4.2% for the first time in three months before retreating from that level. Dovish comments from Fed officials on rate cuts drove yields higher.
Since the Fed made its first 50 basis point rate cut a month ago, yields have risen. Part of this is due to improving economic data, but part of the increase has to do with investor frustration that the Fed will not cut interest rates as aggressively as initially estimated. Traders are giving an 89% chance of a 25 basis point cut at the next Fed meeting on November 6/7.
Homebuilder stocks fell amid concerns about the path of interest rates, with Lennar and DRHorton each losing more than 3%.
“The market is at an overbought level, which makes it vulnerable to anything it considers negative… Now there is concern that the Fed has not declared victory against inflation, and there are also underlying concerns about the outcome of the elections in the USA,” said the strategist. LPL financial analyst Quincy Crosby.
Traders are also keeping an eye on third-quarter corporate earnings that continue this week, with Tesla and Coca Cola on Wednesday and Honywell on Thursday.
General Motors rose more than 10% after beating Wall Street expectations for the third quarter. Thus, Philip Morris jumped 10% after increasing its annual profit forecast, while Verizon fell more than 5% after its total revenue missed analysts’ targets. Lockheed Martin shares fell 6% after lower-than-expected sales.
So far, a fifth of S&P 500 stocks have reported results, with most beating earnings forecasts, according to data from FactSet.