Stocks ended mostly lower on Monday as fears of rising interest rates continued to dent investor sentiment. The tech-heavy Nasdaq recorded its third straight daily loss after huge selloffs in China raised concerns of slowing global economic growth. The S&P 500 though pared initial losses to end the session almost flat on Monday. However, the Dow closed in the green for the first time in three days but gains were kept in check on growing concerns of rising interest rates. The bond market was, however, closed in observance of Columbus Day.
The Dow Jones Industrial Average (DJI) advanced 0.2% or 180.43 points, to close at 26,486.78. The S&P 500 fell 0.04% to close at 2,884.43. The Nasdaq Composite Index closed at 7,735.95, declining 0.7%. A total of 6.93 billion shares were traded on Monday, lower than the last 20-session average of 7.22 billion shares. Decliners outnumbered advancers on the NYSE by a 1.06-to-1 ratio. On Nasdaq, a 1.45-to-1 ratio favored declining issues.
How did the Benchmark Perform?
The Dow added 39.73 points, rising for the first time in three days. The gains were led by Walgreens Boots Alliance, Inc. (WBA – Free Report) . Shares of Walgreens Boots increased 2.3%. However, lingering concerns of rapidly rising interest rates kept most of the gains in check.
The S&P 500 shed 1.14 points, after recovering from the initial losses, helped by the consumer staples and real estate stocks. The Consumer Staples Select Sector SPDR (XLP) gained 1.4%, while the Real Estate Select Sector SPDR (XLRE) advanced 1.3%. However, the S&P 500 closed in the red for the third straight day.
The tech heavy Nasdaq gave up 52.50 points, registering its third straight daily loss. Monday log follows Nasdaq’s first weekly decline since March 23. Tech stocks once again weighed heavy on the index. Shares of Microsoft Corporation (MSFT – Free Report) and Adobe Systems Incorporated (ADBE – Free Report) declined 1.1% and 2.2%, respectively. Shares of Apple Inc. (AAPL – Free Report) declined 0.2%. Adobe Systems has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Higher Bond Yields Continue to Hurt Investors’ Sentiment
Interest rates have been on a tear last week, as the 10-year Treasury yield rose 17 basis points last week, recording its steepest such increase since February. On Monday the 10-year Treasury Yield rose to 3.23% from 3.06%, reaching its highest level since the last week of 2011.
The rise in bond yield reflects the growing perception that the economy is growing stronger. Higher yields equate to higher borrowing costs for both companies and investors. This is leading to a reassessment in equity valuation. A strong economy makes for a good environment for stocks but higher yields have been dampening enthusiasm for equities leading o huge selloffs.
Selloff in China Market Ignites Fears
China’s markets opened for the first time on Monday since the new round of U.S.-China tariffs went into effect. Moreover, on Monday, China announced a steep cut in the cash level that banks need to hold as reserves in an effort to lower financing costs and boost growth amid the trade spat. The possibility of China’s economic growth slowing saw huge selloffs in China’s tech stocks. This further ignited fears of slowing global growth, which led to selloffs of U.S. stocks.
Stocks That Made Headlines
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