Stocks Surge As Treasury Yields Dip, Bitcoin Tests 2023 Highs: What's Driving Markets Monday?

It’s a risk-on start to the week, with investors favoring riskier assets, buoyed by a significant drop in Treasury yields and a weakening U.S. dollar.

All major U.S. indices posted gains during midday trading, with every S&P 500 sector showing positive movement, except for the energy sector.

Bitcoin (CRYPTO: BTC) rallied 3.5% to break above $31,000, testing its 2023 highs, which were previously hit in mid-July. The largest cryptocurrency could mark its fifth straight session of gains, the longest streak since January.

Notably, billionaire hedge fund investor Bill Ackman made headlines by announcing the covering of his short positions on U.S. Treasuries. This decision comes in response to growing global risks and mounting concerns of an impending economic slowdown.

Surprisingly, risk sentiment remained robust as the financial markets entered a pivotal week, in anticipation of next week’s Federal Reserve meeting.

In the upcoming days, four major corporations, namely Alphabet, Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG), Microsoft, Inc. (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:META), and Amazon, Inc. (NASDAQ:AMZN), are scheduled to release their earnings reports, adding another layer of intrigue to the market dynamics.

One key economic data point to watch closely this week is the initial estimate for the third quarter growth rate of the U.S. economy. Economists’ consensus points to a robust 4.2% increase, with the Atlanta Fed’s GDPNow estimate even more optimistic at 5.4%.

Additionally, traders will remain vigilant regarding the escalating conflict in the Middle East, as there are reports that Israeli troops may soon initiate a ground invasion into Gaza.

Cues From Monday’s Trading:

The S&P 500 rose 0.6%, while the tech-heavy Nasdaq 100 outperformed, up 1.1%. Blue chips, as represented by the Dow Jones Industrial Average, were marginally higher. Small caps in the Russell 2000 index rose 0.3%.

US Index Performance on Monday

Monday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.6% higher to $423.50
• The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose 0.1% to $331.51 
• The Invesco QQQ Trust (NASDAQ:QQQ) rose 1% to $358.29, according to Benzinga Pro data.

Looking at S&P 500’s sector ETFs:

• The Energy Select Sector SPDR Fund (NYSE:XLE) was the laggard, down 1.4% today.
• The Communication Services Select Sector SPDR Fund (NYSE:XLC) and the Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) were the top gainers, up 1%.

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Stocks In Focus:

• Chevron Corp. (NYSE:CVX) fell over 3% after announcing the acquisition of Hess Corp. (NYSE:HESS) in a $53 billion all-stock deal.
• Nvidia Corp. (NASDAQ:NVDA) rose 3.5% on track for its strongest session since late August.
• Bitcoin-related stocks including Marathon Digital Holdings, Inc. (NASDAQ:MARA), Coinbase Global Inc. (NASDAQ:COIN), and Riot Platforms Inc. (NASDAQ:RIOT) rose 11%, 8% and 12% respectively.
• Okta Inc. (NASDAQ:OKTA) tumbled 8% on Monday, after falling as much as 11.6% Friday, following the announcement of a security breach.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 2.9%, with a barrel of WTI-grade crude trading at $85. The United States Oil Fund ETF (NYSE:USO) was 2.6% lower to $78.6.  

Treasury yields were lower, with the 10-year yield down by 8 basis points to 4.83% and the 30-year yield down by 11 basis points to 4.96%. The iShares 20+ Year Treasury Bond ETF (NYSE:TLT) was 1.9% higher for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), down 0.5%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust (NYSE:FXE), was 0.7% higher to 1.0667.

European equity indices also rebounded. The SPDR DJ Euro STOXX 50 ETF  (NYSE:FEZ) rose 1.2%. 

Gold edged 0.3% down to $1,974/oz, while silver fell 1.5% to $23.01. Bitcoin was 3.5% higher to $31,038.

Staff writer Piero Cingari updated this report midday Monday. 

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