Dow closes more than 250 points lower, S&P 500 slips from record as bond yields surge: Live updates

Samantha Subin
Jesse Pound

Stocks fell Monday as Treasury yields spiked higher on concerns that the Federal Reserve may not cut rates as much as expected. Lackluster results from McDonald's also dampened investor sentiment.

The Dow Jones Industrial Average dropped 274.30 points, or 0.71%, to settle at 38,380.12. The S&P 500 slipped 0.32% to close at 4,942.81. The index hit a record high last week as Big Tech stocks moved higher. The Nasdaq Composite edged down 0.2% to end at 15,597.68.

See Chart...
S&P 500's 2024 performance

The yield on the 10-year Treasury note was last up more than 13 basis points to 4.166% as investors assessed a fresh batch of strong economic data that suggested rates may stay elevated for longer than anticipated. The benchmark yield traded around 3.81% last week.

"It's a recalibration of expectations around how soon the Fed will pivot," said Keith Lerner, Truist's co-chief investment officer. "The pivot trade is being unwound to a certain extent. The tension between a strong economy and what that means for the Fed is likely to continue to create these kind of reset days."

Fed Chair Jerome Powell on Sunday reiterated comments made after last week's January policy meeting, suggesting that a rate cut in March was unlikely. Expectations for cuts have eased since the remarks, with the probability of a cut next month last at 16.5%, according to CME Group's FedWatch Tool.

Earnings season stretched on, with McDonald's falling 3.7% after posting a mixed quarter. The results heightened concerns about earnings from companies outside of the technology behemoths and whether they can deliver the rest of the season.

Elsewhere, Boeing slumped 1.3% on more 737 Max woes. Tesla also dragged the broader market, losing 3.7% as worries over rising competition and persistent pricing pressures for the EV giant lingered.

Mon, Feb 5 2024 4:10 PM EST

Dow sheds more than 270 points, stocks finish lower

Stocks finished lower to kick off the new trading week.

The Dow Jones Industrial Average dropped 274.30 points, or 0.71%, to settle at 38,380.12. The S&P 500 slipped 0.32% to close at 4,942.81, while the Nasdaq Composite edged down 0.2% to end at 15,597.68.

— Samantha Subin

Mon, Feb 5 2024 3:49 PM EST

Goldman says Americans are judging state of the economy 'more harshly than usual'

Although the U.S. economy is faring well, consumer confidence remains lower than pre-pandemic levels, according to Goldman Sachs. The firm also believes frustration with high inflation continues to weigh on sentiment.

"Americans appear to be judging the state of the economy and government economic policy more harshly than usual," chief economist Jan Hatzius wrote in a Monday note.

Hatzius noted a partisan divide is likely contributing to low confidence levels. Confidence typically drops sharply among supporters of both parties when control of the White House switches to the party they oppose. This trend "appears to be somewhat stronger among Republicans in recent elections," Hatzius said.

Furthermore, high inflation has typically led to prolonged depressed confidence levels, the economist noted.

According to the firm's estimates, "the negative impact of the recent inflation surge on confidence peaked earlier this year, has only faded modestly so far, and will fade meaningfully further but not fully by election day if our inflation forecasts are right," said Hatzius.

— Hakyung Kim

Mon, Feb 5 2024 3:39 PM EST

Investors have a '$6 trillion dollar love affair with cash,' BofA says as money market funds reach new highs

Investors are continuing to stash more of their cash into money market funds, suggesting a "complicated" backdrop for stocks against a rallying market, according to Bank of America Global Research.

"Record high cash levels suggest that investors do not believe in the early 2024 all-time highs on the SPX," technical strategist Stephen Suttmeler wrote in a Monday note. "But high cash levels also suggest dry powder for buying tactical dips in a bullish backdrop."

Investors are having a "$6 trillion dollar love affair with cash," Suttmeler said, noting that money market fund levels reached a new high last week. The ICI All Money Market Fund Total Net Assets hit $6 trillion on Jan. 31, he said.

In the mean time, the market has been rallying. But even though the S&P 500 hit another all-time high on Friday, Suttmeler said the broader market is showing "pesky bearish divergences," with only 34% of NYSE stocks rising on the day. This kind of market breadth is a risk for market dips, he said.

The analyst also noted that the percentage of stocks above their 10-day, 50-day and 200-day moving averages have lower highs, showing diminishing breadth as major indexes have continued to gain so far this year.

— Pia Singh

Mon, Feb 5 2024 3:27 PM EST

Oil prices settle higher after U.S. strikes in Middle East

Oil prices settled higher Monday after U.S. retaliatory strikes against Iranian forces and allied militias over weekend.

The West Texas Intermediate contract for March rose 50 cents, or 0.69%, to settle at $72.78 a barrel. The Brent contract for April gained 66 cents, or 0.85%, to settle at $77.99 a barrel.

The U.S. launched airstrikes late Friday against Iran's Islamic Revolutionary Guard Corps and allied militias in Iraq and Syria. The airstrikes, which hit more than 85 targets, came in response to the deaths of three U.S. troops in a drone strike by Iran-allied militants.

— Spencer Kimball

Mon, Feb 5 2024 3:21 PM EST

New Taylor Swift album is a reason to be long on Spotify, BofA's trading desk

A forthcoming album from Taylor Swift can add to the argument for liking Spotify, according to Bank of America's trading desk.

Swift's record, titled "The Tortured Poets Department," can be good news for the streamer's subscription and active user figures, among other things, traders said. The singer-songwriter announced the venture during the Grammy Awards ceremony on Sunday.

"Her albums are Super Bowls for streaming and she just [surprisingly] announced a surprise Super Bowl and date," wrote members of the trading desk, who operate separately than the investment bank.

CNBC Pro subscribers can read the full story here.

— Alex Harring

Mon, Feb 5 2024 2:58 PM EST

Goldman Sachs thinks the U.S. economy might be growing too quickly

Recent economic indicators may be painting a rosier economic picture for the U.S. than some metrics suggest, according to Goldman Sachs.

"Our most out-of-consensus global view over the past 18 months has been that U.S. growth would remain solid alongside declining inflation. Recently, however, some key indicators have been more than just solid," analyst Jan Hatzius wrote in a Monday note, referring to recently released GDP and nonfarm payrolls numbers. "This raises the question whether the U.S. economy is now growing too quickly to sustain the disinflationary trend."

The U.S. economy grew at an annualized rate of 4.1% in the second half of last year, Hatzius noted, while nonfarm payrolls grew by 353,000 in January, surpassing a Dow Jones estimate of 185,000. Both of these numbers are "well above" Goldman's estimates of long-term sustainable trends in real output and employment, the analyst said.

According to Hatzius, real output is, at most, growing only modestly given that certain GDP alternatives—such as gross domestic income and Goldman's current activity indicator that measures key economic activity—are increasing at a more muted pace compared to GDP. January's payroll gain was also boosted by seasonal factors of larger start-of-year job exits, he said.

— Pia Singh

Mon, Feb 5 2024 2:51 PM EST

RBC says Catalent price on the low end, sees 'small chance' of rival offer

According to RBC analyst Sean Dodge, Novo Holdings is getting contract manufacturer Catalent on the cheap. In a research note, he said contract drug manufacturers typically sell in the 16-20x range, but the deal puts Catalant's value at about 17-times fiscal year 2025 estimates.

Dodge admits that with activist investor Elliott Investment Management's involvement, there likely was a "thorough process," but he sees "a small chance for additional competing bids" given the company's "global breadth and scale."

The sale will be a multistep process, with Novo Holdings selling three of Catalant's fill-finish sites to Novo Nordisk after the deal closes, which is expected in late 2024. The Danish drugmaker has been scrambling to produce enough of its blockbuster diabetes and obesity drugs, Ozempic and Wegovy, to meet the robust demand.

—Christina Cheddar Berk

Mon, Feb 5 2024 2:23 PM EST

Powell trying to avoid 'transitory' mistake, AmeriVet's Faranello says

Fed Chair Jerome Powell called inflation "transitory" in 2021. More than two years after that, the central bank chief does not want to make another mistake like that, according to Gregory Faranello of AmeriVet Securities.

"Coming out of transitory, which the Fed Chair took ownership of last night, "there ain't gonna be a rematch". Jay Powell's Fed will be certain this time around before pulling the trigger," the firm's head of U.S. rates strategy wrote.

The Fed is not ready to ease. It's hard to find many not in favor of lower rates. And the market dynamics in 2024 have been the same since the Fed began tightening," he also said.

— Fred Imbert

Mon, Feb 5 2024 2:02 PM EST

Stick to quality stocks, especially in U.S. tech, UBS says

UBS said investors should stick with quality stocks, especially in U.S. tech. The Wall Street firm, which anticipates a soft landing scenario in its base case, says these companies can weather a slowdown in economic growth.

"In equities, we continue to see quality stocks as a core holding for investors. History shows they tend to outperform in periods of slowing economic growth, as we expect in our base case," read a Monday note from the firm's chief investment office for global wealth management.

"We keep a most preferred stance on the US IT sector, home to many quality stocks. By also complementing core holdings in quality stocks with tactical exposure to small caps, investors should be well positioned to capture more upside if markets continue to move higher," the note continued.

— Sarah Min

Mon, Feb 5 2024 1:47 PM EST

Small-caps underperform

Small-cap stocks were hit particularly hard in Monday's session.

The small-cap focused Russell 2000 lost 1.4% on Monday. Meanwhile, the broad S&P 500 shed just 0.2%.

See Chart...
The Russell 2000 vs. the S&P 500, 1-day

Monday's underperformance marks a continuation of the diverging trend seen among smaller names this year. While the Russell has shed more than 4% since 2024 began, the S&P 500 has advanced more than 3%.

— Alex Harring

Mon, Feb 5 2024 1:33 PM EST

Boeing shares fall on more 737 Max 9 woes

Shares of Boeing declined around 1.7% Monday after the company said it would rework 50 undelivered 737 Max jets following the discovery of misdrilled holes on some fuselages. The rework could potentially result in delays to near-term deliveries.

The news comes amid a period of intense scrutiny for the company after the fallout from the midflight Alaska Airlines accident on a 737 Max 9.

The stock is down 21% in 2024.

— Hakyung Kim

Mon, Feb 5 2024 1:13 PM EST

Markets suffer broad decline Monday but Nasdaq rebounding a little better than NYSE

The stock market is suffering a broad reversal Monday, but the stocks listed on the Nasdaq Stock Market are bouncing back a little more than those on the NYSE in early afternoon trading.

NYSE decliners were recently beating advancers by more than 8 to 1, about in line with trading earlier in the session. Nasdaq decliners swamped advancers by a little less than 7 to 1 recently, compared with 9 to 1 earlier Monday.

Those numbers were mirrored in the number of shares traded on up volume versus down volume. NYSE up volume was recently just 16% against 30% on the Nasdaq, while NYSE down totaled some 83% of all shares traded Monday vs 69% on Nasdaq.

— Scott Schnipper

Mon, Feb 5 2024 1:03 PM EST

Stocks making the biggest moves midday

Check out some of the companies making headlines in midday trading.

Nvidia — The chipmaker climbed 4% and reached an all-time high after Goldman Sachs increased its price target to $800 per share from $625.

CatalentNovo Nordisk — The contract drug manufacturer climbed about 10% on the back of an agreement to get taken over by Novo Holdings. The all-cash deal, which is slated to close in late 2024, offers $63.50 per share. Novo Nordisk added more than 3%.

McDonald's — Shares fell 4% after the fast-food chain reported a revenue miss in the prior quarter.  Management cited the Middle East conflict for the fall in revenue.

Read the full list here.

— Brian Evans

Mon, Feb 5 2024 12:39 PM EST

Coinbase slides 7%, pulled down with broader market as rate uncertainty spooks investors

Crypto stocks fell on Monday with the broader equity market while the yield on the 10-year U.S. Treasury note surged, as investors weighed the possibility that the pace of Federal Reserve rate cuts could be slower than markets had expected.

Coinbase fell 7%, while mining companies Iris Energy, Riot Platforms and CleanSpark lost about 4% each, and Marathon Digital dropped nearly 7%. Microstrategy, which mainly trades a proxy for the price of bitcoin, was down more than 1% along with the cryptocurrency itself, which hovered under the flat line.

"It is important to note that bitcoin has been resilient over the last week despite higher U.S. interest rates and a stronger U.S. dollar," said Zach Pandl, managing director of research at Grayscale. "[We] believe this reflects solid inflows into crypto exchange traded products."

"Fed Chair Powell … sent hawkish policy guidance at last week's FOMC meeting, which was echoed in his 60 Minutes interview on CBS this weekend," he added. "So far, bitcoin seems to be taking this guidance in stride – holding around $43,000 – as crypto markets focus on continued ETF inflows."

— Tanaya Macheel

Mon, Feb 5 2024 11:44 AM EST

What's weighing on the Dow Jones Industrial Average

The Dow Jones Industrial Average dropped nearly 400 points during Monday's session.

McDonald's was the biggest laggard in the 30-stock index, dropping 4% on the back of mixed quarterly results. Boeing slumped 1.7% after finding a new problem with its 737 Max fuselages.

Walgreens Boots Alliance slumped 3.4%, while 3M slipped 2.1%. Home Depot, Nike, Microsoft and Goldman Sachs all fell more than 1% each.

— Samantha Subin

Mon, Feb 5 2024 11:08 AM EST

Market eases expectations for Fed rate cuts

Traders have tempered their expectations for a bit for interest rate cuts following cautionary statements from Federal Reserve officials.

The probability of a previously much-anticipated March cut tumbled to just 14.5% Monday morning, according to the CME Group's FedWatch gauge. The expectation had been above 80% just two weeks or so ago.

For the full year, the market has switched from expecting six cuts to five and was even assigning about a 44.6% probability that the total could fall to four.

Those moves follow an interview Fed Chair Jerome Powell gave to "60 Minutes." The interview aired Sunday and featured Powell not only casting doubt on a March cut but also backing the view, as expressed in the central bank's December "dot plot," of just three cuts this year.

— Jeff Cox

Mon, Feb 5 2024 10:11 AM EST

Paul Tudor Jones says the U.S. economy is on an ‘unsustainable’ path

Billionaire hedge fund manager Paul Tudor Jones believes the U.S. economy could run into major problems down the road due to its burgeoning fiscal deficits, which could eventually hurt the markets.

"We've got a 6%, 7% budget deficit. We're fast-forwarding consumption like crazy," Jones told CNBC's "Squawk Box" Monday. "It should be going gangbusters because we got an economy on steroids. It's unsustainable."

The founder and chief investment officer of Tudor Investment said the danger of this reckless fiscal spending could be veiled by the boom of artificial intelligence, which is improving productivity significantly.

— Yun Li

Mon, Feb 5 2024 10:08 AM EST

ISM nonmanufacturing reading hits 53.4, higher than expected

The U.S. services sector expanded at a faster than expected pace in January, growing for the 13th straight month and providing some strong economic momentum to start the year.

The ISM Services PMI registered a 53.4 reading for the month, representing the share of companies reporting growth against contraction. A reading above 50 indicates expansion. Economists surveyed by Dow Jones had been looking for 52.

January's reading was nearly 3 points better than December, pushed by a sharp gain in employment, which came out of contraction territory and rose to 50.5, a gain of 6.7 points. New orders accelerated to 55 while the prices index surged to 64, a gain of 7.3 points.

—Jeff Cox

Mon, Feb 5 2024 9:53 AM EST

Snap announces layoffs

Social media company Snap announced layoffs on Monday that will impact 10% of its global workforce, or around 500 employees.

"In order to best position our business to execute on our highest priorities, and to ensure we have the capacity to invest incrementally to support our growth over time, we have made the difficult decision to restructure our team," Snap said in a securities filing.

These are Snap's first major jobs cuts since August 2022. Shares of the company dipped 1.7%.

— Jesse Pound

Mon, Feb 5 2024 9:32 AM EST

Stocks open lower to start the week

Stocks opened lower to kick off the trading week.

The Dow Jones Industrial Average fell 170 points, or 0nearly 0.5%, while the S&P 500 slipped 0.2%. The Nasdaq Composite hovered near the flatline.

— Samantha Subin

View the full site