US Stocks See Modest Gains, Energy Outperforms, Bond Carnage Deepens: What's Driving Markets Monday?

In midday trading on Monday, U.S. stocks attempted a rebound following sharp losses experienced Friday.

The bond market continued its downward spiral, with Treasury yields soaring to levels not seen in over a decade across maturities ranging from 10 to 30 years.

The energy sector continued to outperform, driven by oil giants capitalizing on crude prices that have remained at or above $90 per barrel.

The U.S. dollar surged to its highest point in the past 10 months, on track for its eleventh consecutive week of gains. This remarkable ascent has been propelled by the Federal Reserve’s hawkish stance and deteriorating economic prospects in Europe.

Cues From Monday’s Trading:

The S&P 500 rose 0.4% on Monday, following a 1.6% decline on Friday and a nearly 3% drop last week.

The Nasdaq 100 gained 0.4%, reacting after a 3.6% decline last week. The Dow Jones Industrial Average was flat for the day, while small caps in the Russell 2000 soared 0.6% after sinking 3.8% last week.

US Index Performance On Monday

Analyst Color:

The S&P 500 is down nearly 4% on the month, and technical damage is beginning to mount, said LPL Financial’s Chief Technical Strategist Adam Turnquist. “While weak September seasonality is capturing the blame, selling pressure has primarily been driven by a jump in interest rates,” he said.

Technically, the S&P 500 has broken to the downside of a symmetrical triangle formation, Turnquist said. He flagged the sub-4,330 level as downside support in the 4,200-4,300 area, followed by the 200-day moving average at 4,189.

Despite the recent pullback, there have been no major signs of a sustainable flight to safety, the analyst said. “Overall, we believe the market is down but not out,” he said.

“Pullbacks are completely normal within the context of a bull market, and while the jump in rates is concerning, the S&P 500 remains in an uptrend, and above its rising 200-DMA.”

Source: LPL Financial

Monday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.4% higher to $431.89.
• The SPDR Dow Jones Industrial Average ETF DIA held flat at $339.70.
• The Invesco QQQ Trust QQQ rose 0.4% to $359.37, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Energy Select Sector SPDR Fund XLE was the top gainer, up 1.3% today. The Consumer Discretionary Select Sector SPDR Fund XLY and the Technology Select Sector SPDR Fund XLK were the second and third best performers of the day, up 0.8% and 0.5%, respectively.
• The Utilities Select Sector SPDR Fund XLU was the laggard, down 0.9%.

Stocks In Focus:

• Stocks of studios such as Walt Disney Co. DIS, Paramount Global PARA and Warner Bros. Discovery, Inc. WBD, fell after Hollywood’s writers union reached a preliminary labor agreement with major studios.
• AMC Entertainment Holdings Inc. AMC rose 9% after the company’s CEO Adam Aron shared a positive outlook for movie theaters in the wake of the deal.
• Steel Dynamics Inc. STLD rose 3.2%, marking the largest gains in the S&P 500, as Citigroup raised the company’s price target to $130.
• Amazon, Inc. AMZN, rose 1.8% after committing to invest up to $4 billion in ChatGPT competitor and AI startup Anthropic.
• Williams-Sonoma Inc. WSM rose nearly 10% after private equity firm Leonard Green & Partners announced a 5% stake in the firm.
• Recreational vehicle maker Thor Industries, Inc. THO is due to announce its quarterly results after the market close.

Commodities, Bonds, Other Global Equity Markets:

Crude oil slightly fell by 0.2%, with a barrel of WTI-grade crude trading at $89.70. The United States Oil Fund ETF USO was 0.1% lower to $80.50.  

Treasury yields were sharply higher, with the 10-year yield up by 9 basis points to 4.52% and the 30-year yield up by 12 basis points to 5.65%. The iShares 20+ Year Treasury Bond ETF TLT was 2.1% lower for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.5% lower to 1.0591.

European equity indices had a negative session. The SPDR DJ Euro STOXX 50 ETF  FEZ fell 1%. 

Gold edged 0.4% lower to $1,916/oz, while silver fell 1.8% to $23.11. Bitcoin BTC/USD was 0.4% higher to $26,345.

Staff writer Piero Cingari updated this report midday Monday. 

Read Next: Mark Mobius Advises Cutting Back On Chinese Consumer Stocks For This Sector Amid Xi Jinping’s Boost: ‘But The Problem Now Is…’

Photo via Shutterstock.