On Monday, U.S. equities remained flat while U.S. Treasury yields started to reverse and ascended higher. Later in the week, there will be quarterly reports from big retailers what investors expected.
The Dow Jones Industrial Average dropped 12.87 points (or equal to 0.05%) to 36,087.46. The S&P 500 remained unchanged, closing the session at 4,682.81. The tech-heavy Nasdaq lost 0.05%, dropping to 15,853.86 as Treasury yields climbed.
The 10-year yield crossed over 1.7%, while the 30-year touched the 2.1% mark. Tech stocks lead to a decline as yields increase.
Senior investment strategist for Allianz Investment Management, Charlie Ripley, said that today’s price movement in the bond market indicates fluid inflation. He added that markets remain to adjust to where they expect Fed policy to go even though the Fed hasn’t fully signaled the policy’s final target.
The increase in Treasury yields affected Tesla shares which started to drop 1.8% and continued their drop from last week when its CEO Elon Musk sold approximately $8 billion worth of Tesla stocks. Tesla ended the week down 15.5% for its worst week since the beginning of 2020.
Nvidia also missed 1.3% as investors drew back their positions before its quarterly results this week.
This week, investors mainly focused on upcoming quarterly earnings reports from some major retailers. Target achieved about 1.7%, while Lowe’s missed 0.6%. Both companies will report on Wednesday this week, while Walmart and Home Depot Today reported declining shares. The index rose 0.8% on a month-over-month basis.
Liz Young, head of the investment strategy at SoFi, noted that consumer discretionary stocks doubled the performance in the past month. She added that retailers would want earnings to square. She said there might be a little bit of a pullback in the consumer sector if earnings come in softer than expected. But if it stays as the rest of the third quarter, it means that earnings should be solid. She added that inflation would become a drag. Dollar Tree shares jumped 14.3% after a report that Mantle Ridge (activist investor) took a stake worth at least $1.9 billion while pushing it to add more to shareholder value.
Boeing increased nearly 5.6% after the news that Saudi Arabian Airlines started communicating with Boeing and Airbus for a jet order. At the same time, Emirates announced that it ordered two Boeing Freighters at Dubai Airshow this year.
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