On Monday, the three major U.S. stock indices closed higher, with the Nasdaq index reaching a record high. Traders ignored the rise in U.S. Treasury yields and absorbed new economic data.
The Dow Jones Industrial Average rose by 90.93 points, an increase of 0.18%, to 51,267.89; the S&P 500 Index gained 51.23 points, a rise of 0.66%, to 7,773.95; the Nasdaq Composite Index increased by 286.44 points, a gain of 1.05%, to 27,477.31, setting a new closing high.
Most of the "Seven Sisters" stocks in the U.S. market closed higher, with NVIDIA rising 2.12% to reach a record high, and its market value climbing to $5.76 trillion. Tesla gained more than 2%, while Google, Meta, and Microsoft rose by over 1%. Amazon and Apple saw slight declines. Cryptocurrencies, oil and gas, and pharmaceutical retail sectors led the gains, with Novavax's stock rising more than 20%, Moderna rising nearly 7%, and Coinbase and Circle both increasing by over 2%. The U.S. stock Vaxcyte closed up 30%, as the company's pneumococcal vaccine met the targets of late-stage clinical trials. SpaceX also rose by over 7%.
The founder of Infrastructure Capital Advisors and also CEO Jay Hatfield stated that tech stocks are “sort of like reverse bond trading.” “It’s about buying tech stocks and selling everything else, so it’s a bit like an unstoppable giant.”
Hatfield added that since the outbreak of the pandemic, tech stocks have always been considered a safe-haven asset, due to their high growth associated with profitability and their relative sensitivity to lower interest rates.
“It really doesn’t matter how much interest they pay on their debts, and since the demand for computing power is so strong, (tech stocks) are not truly affected by interest rates,” said Hatfield.
As tech stocks rose, bond yields also increased. The yield on the U.S. benchmark 10-year Treasury note recently rose by more than 3 basis points to 5.311%, and the yield on the 30-year Treasury note rose by more than 3 basis points to 5.664%. Due to traders' concerns that inflation will lead the Federal Reserve to maintain higher interest rates for a longer period, both yields have soared to multi-year highs in recent weeks.
As traders digest the latest report from the Supply Management Institute ( ISM ) on economic growth in the service sector, both stocks and bonds experienced volatility. The ISM report shows that the Service Sector Purchasing Managers Index (PMI) for September was 54.9%, which is roughly in line with expectations. However, this figure is slightly lower than the growth level of the previous month.
Investors are now turning their attention to the Federal Reserve, which will release the minutes of its September meeting – which may reveal the considerations behind its decision to raise interest rates by 25 basis points last month.
International oil prices fell on the 5th. As of the close of trading on that day, the price of light crude oil futures for delivery in November at the New York Mercantile Exchange dropped by $1.68 to close at $89.43 per barrel, a decrease of 1.84%; the price of London Brent crude oil futures for delivery in December fell by $1.93 to close at $100.32 per barrel, a decrease of 1.89%.
The third-quarter financial reporting season will kick off next week, with major U.S. banks releasing their results. Data shows that analysts on average expect earnings for the S&P 500 index to grow by more than 30% year-over-year, largely due to AI related stocks.
Against the backdrop of recent turmoil in the bond market and the ongoing Middle East wars, the market has maintained remarkable resilience. Brent crude oil futures have remained above $100 per barrel, causing concern among investors. Some strategists believe that a pullback is justified, while others think there is still room for further gains.
According to the CME FedWatch tool, after Friday's employment data showed that the slowdown in U.S. employment growth in September exceeded expectations, traders believed that the probability of a Fed interest rate hike at its October meeting was 24%, down from 70% a week earlier.
