The Dow Jones Industrial Average fell sharply on Monday, snapping a three-day winning streak, as rising Treasury yields weighed on investor sentiment ahead of key earnings reports. The S&P 500 also slipped, while the Nasdaq Composite edged higher, bucking the broader trend.
The Dow lost 344.31 points, or 0.8%, closing at 42,931.60, while the S&P 500 dipped 0.18% to 5,853.98. Meanwhile, the tech-heavy Nasdaq Composite rose 0.27% to end the day at 18,540.01, marking a small gain amid otherwise downbeat trading.
Concerns over persistently high interest rates pressured consumer and homebuilder stocks. Retail giant Target saw its shares fall 3.8%, Builders FirstSource dropped 5.2%, and home construction company Lennar shed 4.4%.
Yields on U.S. Treasury bonds surged, with the 10-year Treasury yield jumping nearly 12 basis points to 4.19%. Higher bond yields tend to make equities less attractive by increasing borrowing costs and cutting into future corporate profits.
This week, earnings season kicks into high gear, with roughly 20% of S&P 500 companies set to report third-quarter results. Major players like Tesla, Coca-Cola, and GE Aerospace are among those expected to release their earnings. Early results have been mixed, with about 70% of the companies that have reported so far beating expectations, according to data from FactSet. However, analysts had significantly lowered earnings forecasts for the quarter.
Despite Monday’s declines, many investors remain optimistic about the potential for equities to continue their upward trajectory. However, concerns about stretched valuations, the upcoming U.S. presidential election, and rising geopolitical tensions could introduce more volatility in the markets.
Monday’s drop followed a strong performance last week, when both the S&P 500 and the Dow reached all-time highs, marking a sixth consecutive week of gains for both indexes.
