U.S. Stocks Are Muted as the 10-Year Treasury Yield Shoots Above 5%

U.S. Stock

U.S. stocks saw limited movement on Monday, with Treasury yields rising and investors awaiting significant tech earnings reports. The Dow Jones Industrial Average is down 38 points or 0.1%. S&P 500 unchanged. NASDAQ Composite up 0.2%. All three indexes began the day on a downward trajectory.

10-Year U.S. Treasury Yields Cross 5%

The benchmark 10-year Treasury yield reached 5% on Friday, its highest level since the 2007 financial crisis, although it slightly retreated afterward. However, yields surged again on Monday, hitting 5.025%. This comes as investors express concerns about the possibility of prolonged high-interest rates, especially after Fed Chair Jerome Powell’s recent hints at more monetary tightening.

Investors are on edge as they anticipate earnings reports from tech giants instrumental in the S&P 500’s 10% year-to-date gain. Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOGL) are set to report on Tuesday, Meta (NASDAQ: META) on Wednesday, and Amazon (NASDAQ: AMZN) on Thursday. These companies, along with Apple (NASDAQ: AAPL), Nvidia (NASDAQ: NVDA), and Tesla (NASDAQ: TSLA), have played a pivotal role in the market’s performance, making disappointing results a potential concern.

Chevron’s Acquisition of Hess

In the energy sector, Chevron (NYSE: CVX) has announced its intentions to acquire smaller rival Hess (NYSE: HES) in an all-stock deal worth $53 billion, representing a premium of around 4.9% to the last closing share price. This move follows Exxon’s (NYSE: XOM) $60 billion offer for Pioneer Natural Resources (NYSE: PXD), aiming to become the largest producer in the largest U.S. oilfield. Chevron’s shares dropped 2.4%, while Hess shares fell 0.4%.

Apple’s Decline Due to Foxconn Tax Probe

Apple’s stock price fell by 1.5% as Foxconn (TW: 2354), a major supplier of Apple’s iPhones, faces a tax probe in China, as reported by the state-backed Global Times newspaper on Sunday. Crude oil prices experienced a decline on Monday as diplomatic efforts to manage the situation in Gaza intensified. However, geopolitical tensions remained high due to Israel’s ongoing bombardment of the enclave. Israel has refrained from launching a ground assault on the region, likely to allow negotiations for the release of hostages and diplomatic efforts. Late last week, Hamas released two U.S. hostages from Gaza. President Joe Biden visited Israel last week, and the leaders of France and the Netherlands are expected to visit in search of a solution to the conflict. Nonetheless, Israel’s amassing of forces around Gaza raises concerns about the potential for further escalation in the Israel-Hamas conflict.

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