Dow still in the red
Bonds compete with stocks
October 23, 2023, 11:48 p.m
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The US stock markets are starting the week inconsistently: After the decline of the last few days, the Dow continues to fall, while the Nasdaq is going up again a bit. Investors are primarily focusing on returns on the US bond market.
The US stock markets closed mixedly on Monday. “It was a very choppy start to the week,” said Craig Erlam, analyst at trading house Oanda. The continued rise in US Treasury yields has made investors very nervous. The Dow Jones Index lost 0.6 percent to 32,936 points. The broad one S&P 500 lost 0.2 percent to 4217 points. The technology-heavy one Nasdaq meanwhile, advanced 0.3 percent to 13,018 jobs.
The ten-year bonds had reached the psychologically important five percent mark early on Monday for the first time in 16 years. In return for the falling price, they temporarily yielded 5.021 percent. However, as trading continued, they fell and yielded 4.852 percent, which brightened the mood significantly. “Higher bond yields represent an attractive alternative to stocks,” said Marios Hadjikyriacos, an analyst at broker XM. In addition, because of the high returns, it will also be more expensive for companies to take on debt. This limits the scope for expansion and ultimately the growth in earnings.
Market participants focused on the economic data expected this week. “GDP data will likely show a fairly robust third quarter, reinforcing expectations that the Fed will keep interest rates tight for longer,” said Laura Cooper, a strategist at investment firm BlackRock. Industry giants such as Microsoft, Alphabet, Amazon and Meta will also be presenting figures in the coming days. “Regardless of what results we see from the big tech companies this week, they will not justify their stretched valuations,” said David Bahnsen, investment chief of the Bahnsen Group.
Argentina in focus
The stock market won when it came to crypto assets Coinbase and the blockchain operator Bitfarms, after Bitcoin climbed to a three-month high. The cryptocurrency rose in price for the fifth day in a row and gained almost seven percent to $31,664.
Chevron fell by 3.7 percent. The background is a $53 billion stock deal in which the energy company is the smaller rival Hess wants to take over. The Hess share temporarily rose by 2.1 percent, but lost value as trading continued.
In addition, shares of Argentine companies listed in the USA fell YPF and Cresud after the presidential election by 6.5 percent. After Sunday’s vote, Economy Minister Sergio Massa was ahead of the ultra-right and libertarian economist Javier Milei, and both are now going into the runoff. “Massa and Milei both represent greater uncertainty going forward,” said Graham Stock, strategist at RBC BlueBay Asset Management.
Things were looking up for Nvidia. According to insiders, the company wants to attack Intel head-on in one of the most important semiconductor markets with its own PC processors. The US company, known for its graphics cards and artificial intelligence (AI) chips, has started developing CPUs that could run Microsoft’s Windows operating system, insiders told Reuters. Intel’s arch-rival AMD also wants to build Arm processors for Windows.