4:17pm: Chevron stock falls on acquisition news
The Dow closed Monday down 191 points, 0.6%, at 32,936, the Nasdaq Composite added 35 points, 0.3%, to 13,018 and the S&P 500 slid 7 points, 0.2%, to 4,217. The small-cap Russell 200 index lost 14 points, 0.8%, to 1,667.
Despite losing steam in the afternoon, the Nasdaq Composite managed to snap a four-session losing streak. Nasdaq component Chevron, though, saw its shares dip 3.7% after the company announced a $53 billion acquisition of rival Hess.
Meanwhile, the 10-year Treasury yield climbed above 5% again before settling around 4.85%.
The rise in yields, “should accelerate an already weakening economic picture that is masked by higher rates,” said Canaccord Genuity (TSX:CF, LSE:CF) chief market strategist Tony Dwyer in a Monday note.
12:00pm: Stocks rally, bond yields ease as Ackman reverses call
US stocks rallied, led by technology shares, ahead of key earnings this week, and as Bill Ackman said he'd reversed his bearish bet on bonds.
At midday, the Dow Jones Industrial Average was little changed at 33,130.98, the S&P 500 was up 12.24 points, 0.3%, at 4,236.40 and the Nasdaq Composite was up 67.00 points, 0.5%, at 13,050.80.
Billionaire investor Bill Ackman said that he had covered his short position in 30-year Treasury bonds, suggesting that a weaker market environment could drive yields lower and prices higher.
“There is too much risk in the world to remain short bonds at current long-term rates,” Ackman posted on X, the website formerly known as Twitter.
We covered our bond short.
— Bill Ackman (@BillAckman) October 23, 2023
“The economy is slowing faster than recent data suggests.”
The move prompted some easing in yields although the yield on the 30-year bond remains above 5%.
Alphabet, Amazon and Microsoft all report this week and investors will be hoping they can provide a boost to a flagging equity market.
Apple shares failed to join in the tech rally after China announced that it was investigating Foxconn for tax irregularities on its subsidiaries in Guangdong and Jiangsu provinces.
9:45am: US stocks open lower amid rising bond yields
US stocks opened lower amid rising bond yields and uncertainty over the Middle East.
Shortly after the opening bell, the Dow Jones Industrial Average was down 224.22 points, 0.7%, at 32,903.06, the S&P 500 was down 28.99 points, 0.7%, at 4,195.17 and the Nasdaq Composite was down 124.32 points, 1.0%, at 12,859.49.
Fawad Razaqzada at Forex.com said: “Sentiment remains bearish towards risky assets, with global indices continuing to fall at the start of the new week following a tumultuous and eventful last week.”
“Price action at the start of this week mirrors thar of last week when global financial markets came under intense pressure. The situation in the Middle East remains a big concern for investors, compelling investors to remain defensive,” he added.
Bond yields rose once more, with the yield on benchmark 10-year Treasuries going above 5% for the first time since 2007, as investors bet that the Federal Reserve will keep interest rates at current high levels for longer.
Stocks on the move include Chevron, down 2.8%, after it unveiled the $53 billion acquisition of smaller rival, Hess, up 0.5%.
Investors are also looking ahead to a busy week of earnings with around 40% of S&P companies reporting.
7:00am: US stocks expected to fall as bond yields climb
US stocks look set to start the week on the back foot as bond yields continue to march higher.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.6% lower, while those for the S&P 500 were down 0.6%, and contracts for the Nasdaq 100 futures fell 0.7%.
The 10-year Treasury yield crossed 5% for the first time in 16 years, propelled by expectations the Federal Reserve will maintain elevated interest rates and that the government will further boost bond sales to cover widening deficits.
The yield rose 11 basis points to 5.02%, the highest since 2007.
Federal Reserve chair Jerome Powell suggested last week that central bankers are inclined to hold rates steady at their November meeting, but remain open to hiking again if a resilient economy fans inflation risks.
Elsewhere, Chevron Corp has bought Hess in a $53 billion in the latest mega-deal in the oil industry.
The all-stock deal values each Hess share at $171 per share based and including debt, the enterprise value of the deal amounts to $60 billion.
Chevron said it expects the deal to lead to an increased rate of growth in dividends and more share buy-backs.
Shares in Chevron fell 3.3% in pre-market trading while Hess was 0.3% higher.