Stock Market Today: S&P 500 Closes Lower as Spike in Treasury Yields Affects Performance

The S&P 500 experienced a decline on Monday, primarily due to an increase in Treasury yields following a surprisingly strong jobs report from last week, which tempered expectations for a significant interest rate cut by the Federal Reserve in the upcoming month.

By 4:00 p.m. ET, the Dow Jones Industrial Average was down 398 points, or 0.9%, while the S&P 500 and NASDAQ Composite dropped 1% and 1.2% respectively.

### Treasury Yields Rise as Rate Cut Expectations Shift

Treasury yields surged, putting pressure on stocks after the better-than-expected September jobs report reduced the likelihood of a large rate cut at the Fed’s November meeting. The yield on the 10-year Treasury climbed above 4% for the first time since August.

Goldman Sachs noted that “the rebound in job growth puts the FOMC on a path of 25 basis point cuts for now.” In the coming days, several Federal Reserve officials are expected to speak, providing insights into monetary policy in light of the strong jobs numbers.

Minneapolis Fed President Neel Kashkari mentioned that the Federal Reserve welcomed the robust September jobs report, emphasizing the strength of the economy and its focus on the labor market. “It looks like it is still a strong labor market…it’s really good news as we want to keep a strong labor market,” he stated.

The minutes from the Fed’s September meeting, scheduled for release on Wednesday, are anticipated to offer additional guidance on rate cuts. During that meeting, the Fed had cut rates by 50 basis points, marking the beginning of an easing cycle.

Consumer price index inflation data for September will also be released later this week and is expected to influence expectations regarding future interest rate trends.

### Banks Gear Up for Q3 Earnings Season

The third-quarter earnings season is set to begin this week, with prominent banks like JPMorgan Chase, Wells Fargo, and Bank of New York Mellon reporting their quarterly earnings on Friday.

Market participants are keen to assess whether corporate earnings have managed to withstand the pressures of high interest rates and persistent inflation. Optimistic investors hope that the earnings results will support the increasing valuations seen in the stock market. The S&P 500 has risen 20% year-to-date and is trading close to record highs, despite recent fluctuations driven by heightened geopolitical tensions in the Middle East.

### Stock Movements: Google, Pfizer, and Hershey

Alphabet Inc Class A shares fell over 2% after a U.S. judge ruled against the company in an antitrust lawsuit involving Epic Games, requiring changes to how it manages its Google Play store. Google has announced plans to appeal this ruling.

In contrast, Pfizer’s stock increased by 2.2% after reports surfaced that activist investor Starboard Value had acquired a stake of around $1 billion in the company, aiming for a turnaround.

Hershey Co saw a decline of 2% after UBS downgraded its stock to neutral from market perform, citing concerns that ongoing inflation could continue to impact profit margins.

Meanwhile, Amazon’s stock decreased by over 3% following a downgrade from Wells Fargo, with analysts expressing concerns over escalating competition from Walmart.