Dow Jones gains as bank stocks rise, but Nasdaq is under pressure as Treasury yields briefly explode to 1.5%

Dow industrials rose sharply late Monday morning, as bank stocks soared and were helped by a rally in Treasury yields. However, the movement of rates was causing headwinds for rate-sensitive sectors of the market, including technology.

What are the main indexes doing?
  • The Dow Jones Industrial Average DJIA,
    + 0.40%
    traded up 164 points, or 0.5%, to 34,960, and had reached an intraday high at 35,061.12.

  • The S&P 500 SPX index,
    was down 5 points, or 0.1%, to about 4,451.

  • The Nasdaq COMP Composite Index,
    fell 0.5%, or 72 points, to 14,974, but was as low as 14,864.96 earlier on Monday.

  • The Russell 2000 RUT Small Cap Index,
    + 1.70%
    climbed 1.7% to 2,287.

On Friday, the Dow Jones rose 33 points, or 0.1%, to 34,798, the S&P 500 rose 7 points, or 0.15%, to 4,455, while the Nasdaq lost 5 points, or 0, 03%, at 15048.

What drives the markets?

A move in yields served as the main catalyst for equities on Monday, with another massive selloff in the benchmark 10-year Treasury pushing its rate above 1.5% for the first time since late June, according to FactSet. Yields and prices move in opposite directions.

Rising yields can increase the discount rate of stocks related to technology and highly valued sectors, while also helping to boost stocks of financials whose business models benefit from higher long-term rates. Goldman Sachs Group Inc.
+ 2.27%
stocks rose 2.2%, while the ETF SPDR Financial Sector
increased by 1.2%.

Meanwhile, an energy crisis sweeping the world was also at the center of concern on Monday. Power shortages have led to forced production cuts at factories in China, while in the UK a shortage of truck drivers has resulted in hoarding and lower inventory at gas stations.

Goldman Sachs analysts raised their oil price forecast to $ 90 a barrel, citing the impact of what it called the most bullish hurricane in U.S. history on supply. The Energy Select Sector SPDR ETF XLE,
+ 3.90%
jumped 3.6% as oil prices continued to climb.

The energy disruptions, meanwhile, highlight what is a growing problem for the global economy, which is that supply has not recovered as quickly as demand in various markets. Wholesale Costco
last week, said it was placing limits on purchases of toilet paper and water.

Durable goods orders jumped 1.8% in August, largely on increased demand for Boeing airliners, but continued supply shortages held back automakers and continued to dampen economic recovery American. Economists polled by the Wall Street Journal expected an increase of 0.6%.

Investors continued to be wary of the impact of China Evergrande’s 3333,
+ 8.05%
debt problems on the world’s second-largest economy, while elections in Germany, Europe’s No.1 economy, have so far failed to produce a decisive result in what are expected to be months of coalition talks .

A number of Federal Reserve officials are due to speak this week. Chicago Fed Chairman Charles Evans in a speech Monday morning said he was more concerned that the economy was not producing enough inflation rather than heating up too much. New York Fed Chairman John Williams and Fed Governor Lael Brainard were also due to speak on Monday.

“The absence of a clear winner in the German election combined with a new batch of speeches from most central bankers could slow the rally,” Pierre Veyret, technical analyst at ActivTrades, said in a note. In addition, investors’ eyes are cautiously watching the situation in China as the energy and liquidity crises worsen, increasing fears of a ripple impact on other economies.

In Public Health News, Managing Director of Pfizer Inc. PFE,
said the company expects to submit data from late-stage trials of its COVID-19 vaccine in children aged 5 to 11 to the United States Food and Drug Administration within days, giving hope that Another key patient group will soon be eligible for the shots.

Which companies are targeted?
  • Swedish electric car manufacturer Polestar Performance AB said on Monday it would go public through a merger with a special purpose acquisition company Gores Guggenheim Inc.
    + 4.70%
    in a deal with an implied enterprise value of around $ 20 billion. Gores Guggenheim shares rose 2.5%.

  • In a Monday blog post, Facebook Inc.
    that he was putting a “pause” on efforts to create a version of Instagram for children under 13. Shares fell 0.9%.

  • Public Service Enterprise Group
    on Monday announced it would increase its annual dividend by 12 cents per share to $ 2.16 per share starting in the first quarter of 2022 and repurchase $ 500 million of shares after the $ 1.9 billion sale closes from its Fossil unit to ArcLight Capital Partner LLC, as announced in August. The shares rose almost 2%.
  • Beyond Meat Inc. BYND announced Monday that it is expanding the availability of Beyond Breakfast Sausage Classic Patties to more than 1,500 Walmart Inc. WMT stores and Beyond Breakfast Sausage Spicy Patties to more than 1,300 stores.
  • Actions of Acceleron Pharma inc. XLRN gained more than 6% on Monday after Bloomberg reported on Friday that an anonymous buyer was planning to spend $ 11 billion to buy the company.

  • Actions of Intra-Cellular Therapies Inc. ITCI gained 3% on Monday after the company said clinical data showed its experimental treatment for bipolar disorder reduced depressive symptoms.

How are the other assets doing?
  • The yield on the 10-year TMUBMUSD10Y T-bill rose to around 1.483% on Monday from 1.459% on Friday.

  • The ICE US Dollar Index DXY, a measure of the currency against a basket of rivals, rose 0.1% to 93.43.

  • Oil futures rallied, with the US benchmark CL00 trading up 1.7% to $ 75.66 a barrel. GC00 gold futures added 0.3% to about $ 1,757.60 an ounce.

  • In Asia, Hong Kong’s Hang Seng HSI index rose less than 0.1%, while China’s CSI 300,000,300 index climbed 0.6%. The Nikkei 225 NIK index closed slightly lower.

  • In Europe, the Stoxx Europe 600 SXXP index traded down less than 0.1%, while the FTSE 100 UKX index traded up 0.2%.

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