The broader US market ended lower as equities saw a decline Monday. This is because Treasury yields increased, with traders and analysts expecting that the US Fed might not reduce rates as much as expected. Apart from this, dismal performance from the food giant, McDonald’s dampened the investors’ sentiments.
Since frontline indices in the US ended lower, was the decline significant? Is this the end of strong upward momentum? Well, we believe its not!
Dow Jones Industrial Average saw a decline of ~274.30 points, or 0.71%, to end the session at ~38,380.12. S&P 500 fell by 0.32% to close at ~4,942.81. This index touched record high in the week gone by, with big technology stocks moving higher. Nasdaq Composite went down by ~0.2% to close at ~15,597.68.
While equity markets saw a decline, what’s going on in the bond markets? What about the risk-free rate? Where are investors putting their money?
Since frontline indices in the US ended lower, yield on 10-year Treasury note was last seen increasing by over ~13 basis points to touch ~4.166%. This rise came as investors assessed the new releases related to strong economic data. As a results of this, experts and analysts expected that rates might stay elevated for a little longer than expected. In the last week, benchmark yield hovered at around 3.81%.
The US Fed Chairman Jerome Powell reiterated the comments Sunday which were made post last week’s policy meeting held in January. He suggested that rate cut in the month of March is unlikely. Expectations for rate cuts have moderated after the remarks, and probability of cut in the next month stands at ~16.5%, as per CME Group’s FedWatch Tool.
The markets were impacted because of the earnings season too! McDonald’s closed the day lower, after the company saw a mixed quarter. These results raised concerns regarding the earnings from companies not belonging to tech sector and whether or not they can post healthy numbers for the rest of season.
Elsewhere, Boeing saw a decline of ~1.3% as tensions continued regarding the 737 Max. Tesla impacted the market movement, with the scrip losing ~3.7%. This decline came as worries regarding the higher competition and continued pricing pressures for EV pertained.