US stocks fell on Monday as investors revised their views on interest rate cuts after a spectacular jobs report, ahead of a week of key inflation data and the start of earnings season.
The Dow Jones Industrial Average (^DJI) fell 0.3% after hitting a new record as stocks soared to close the week. The S&P 500 (^GSPC) lost about 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) led the losses with a 0.4% drop.
Hopes for a huge rate cut by the Federal Reserve have faded after a better-than-expected September jobs report allayed concerns about cracks in the labor market. The benchmark 10-year Treasury yield (^TNX) hit 4% for the first time since August amid doubts over the Federal Reserve’s next move.
Read more: What the Federal Reserve’s rate cut means for bank accounts, CDs, loans and credit cards
Traders abandoned last week’s bets on a 0.50% rate cut in November and now see an 88% chance of a 0.25% move, according to the CME FedWatch tool. Those expectations could drag down stocks, which have hit record highs amid confidence that big rate cuts and an economic “soft landing” were on the table.
Now the wait has begun for the October consumer inflation report due out Thursday, which will provide new insight into whether the Federal Reserve is making progress in reducing already cooling price pressures to its target of 2%.
The start of third-quarter earnings is in the spotlight as Goldman Sachs (GS) raised its target for the S&P 500 (^GSPC), saying it expects stronger margin growth for corporate companies. After Pepsi’s (PEP) results on Thursday, the season begins in earnest on Friday with reports from big banks JPMorgan (JPM), Wells Fargo (WFC) and BlackRock (BLK).
Live2 updates
-
Stocks Open Lower as 10-Year Treasury Yield Tops 4%
Major averages opened lower on Monday as the 10-year Treasury yield (^TNX) climbed back above 4%.
The Dow Jones Industrial Average (^DJI) fell about 0.3% after hitting a new record high on Friday. The S&P 500 (^GSPC) lost about 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.5%.
The 10-year Treasury bond (TNX) yield hit 4% for the first time since August as hopes of another 50 basis point cut from the Federal Reserve faded after a better-than-normal September jobs report. expected.
Oil prices extended gains on Monday after their biggest weekly rise in more than a year, as markets expected an Israeli retaliation against Iran for its missile bombardment last week.
West Texas Intermediate crude oil futures (CL=F) advanced more than 1% to trade above $75 a barrel, after gaining more than 9% last week. Brent futures (BZ=F), the international benchmark, also rose more than 1% to trade above $79 per barrel.
-
Pfizer Stock Rises After Reports Starboard Takes $1 Billion Stake
Pfizer (PFE) shares rose 2.6% premarket on Monday as investors reacted to multiple media reports that activist investor Starboard Value had acquired a $1 billion stake in the pharmaceutical giant .
Starboard has approached Pfizer executives Ian Rand and Frank D’Amelio to help turn around the drugmaker, multiple media outlets reported, citing anonymous sources. Pfizer, the maker of the world’s first approved COVID-19 vaccine, has struggled to maintain its dominance after the pandemic. Rand and D’Amelio expressed interest in helping Starboard, The Wall Street Journal reported. Starboard’s plans and the changes it would make at Pfizer are unclear.
The stock’s moves early Monday morning will lead to positive results for the year, but the stock is well below all-time highs near $60 in 2022.
Pfizer is scheduled to report its results on October 29. Wall Street analysts expect the company to report revenue of $14.8 billion, up about 12% from a year ago. Only half of the analysts covering the stock recommend buying it, according to Bloomberg data.