Stocks retreated on Monday as rising yields and worries over the conflict in the Middle East overshadowed strong Goldman Sachs earnings and hot retail sales data.
The Dow Jones Industrial Average lost 248.13 points, or 0.65%, to close at 37,735.11. The 30-stock index relinquished an advance of more than 1% seen early in the session to mark its sixth straight losing day, a streak not seen since June. Monday's losses also pulled the blue-chip average near its 2024 flatline, a stunning turn after trading close to the 40,000 level just weeks prior.
The S&P 500 slipped 1.2% to finish at 5,061.82, despite trading up as much as 0.88% earlier in the session. The Nasdaq Composite tumbled 1.79% to 15,885.02 as Salesforce and other technology stocks dropped.
Higher rates poured cold water on the market bounce seen Monday morning. The yield on the closely followed 10-year Treasury rose above the key 4.6% level in the session and touched its highest point since mid-November.
Yields popped after data showed retail sales increased 0.7% in March, providing the latest indication that consumption remains strong despite inflationary pressures. That pace was above the 0.3% consensus forecast of economists polled by Dow Jones.
Also weighing on investor sentiment was Iran's launch of drones and missiles at Israel on Saturday night, marking the first direct attack on Israel from Iranian territory. While the majority of threats were intercepted, concerns of retaliation remain. The CBOE Volatility Index, Wall Street's fear gauge, closed at its highest level since October.
"It's really all trading off of news snippets and pieces that are coming out of the Middle East right now," said Alex McGrath, chief investment officer at NorthEnd Private Wealth. "It kind of throws this fear fly into the ointment, so to speak."
Oil prices settled lower on Monday, giving up some gains after rising in the weeks leading up to the attack. But the commodity came off lows in afternoon trading, another factor providing downward pressure on the market.
"Historically, geopolitical shocks cause short-term volatility, not long-term market declines," said Emily Bowersock Hill, CEO of Bowersock Capital Partners. "In this current environment, however, the risk of an extended period of volatility is higher, given the inflationary oil price shocks that may emanate from the heightened tensions in the Middle East."
The Dow was led down by Salesforce, which dropped more than 7% on reports that the software company was in talks to acquire data management firm Informatica. On the other hand, fellow Dow member Goldman Sachs popped nearly 3% after beating Wall Street expectations on both lines in the first quarter.
Monday's declines add to the steep losses seen last week, as lingering inflation concerns and a poor start to the new corporate earnings season weighed on traders. Both the Dow and S&P 500 saw their worst weekly performances since last year.
The three major indexes finished Monday's session down.
The S&P 500 and Nasdaq Composite tumbled 1.2% and 1.8%, respectively. The Dow slid 0.7%, marking its sixth straight losing day, the longest negative losing streak since June.
— Alex Harring
There were five S&P 500 stocks making new lows not seen in more than a year on Monday as the index struggled. These include Dow component Boeing, which has plunged more than 30% this year amid safety concerns.
Here is the full list:
— Sarah Min, Chris Hayes
Even if companies can outperform investors' expectations this earnings cycle, their stocks may not see the boost they expect, JPMorgan said.
"The likely earnings beats do not necessarily mean that equities will advance during the reporting season," said Mislav Matejka, head of global and European equity strategy.
According to Matejka, the equity market has already strongly re-rated during the first quarter. Combined with fears over sticky inflation and geopolitical uncertainty, concerns over interest rates "spiking for the 'wrong reason'" are weighing heavily on the market, he added.
— Hakyung Kim
The oil market on Monday shrugged off Iran's weekend air assault against Israel with U.S. crude and the global benchmark both settling slightly lower.
The West Texas Intermediate contract for May lost 25 cents, or 0.29%, to settle at $85.41 a barrel. June Brent futures fell 35 cents, or 0.39%, to settle at $90.10 a barrel.
The market had already priced in the risk from an attack Iran had telegraphed for days beforehand, and traders breathed a sigh of relief after Israel and the U.S. intercepted nearly all the missiles fired.
What happens next depends on how Israel decides to respond.
"What is not priced into the current market, in our view, is a potential continuation of a direct conflict between Iran and Israel," Maximilian Layton, head of commodities research at Citi, told clients in a note. Oil prices could spike above $100 a barrel depending on how Israel responds to the attack, the analyst wrote.
— Spencer Kimball
The major indexes resumed their sell-off on Monday, and the Nasdaq Composite slipped below its 50-day moving average as the index dropped about 1.7%.
It was the first time the tech-heavy index slid below this key threshold since Nov. 3, 2023. If it closes below that level, it will be a first since Nov. 2, 2023. The index is up more than 30% in the past 12 months.
The 50-day moving average is a technical indicator that traders watch to assess short-term trading trends. A close below this level could signal an upcoming downtrend for an asset.
— Darla Mercado, Nick Wells
The macroeconomic backdrop is looking harsh for risk assets, according to Barclays.
In recent weeks, the economy has been dominated by commodities moving higher, while stocks remain at their all-time highs and inflation relents at higher levels. But all these factors combined made for a very worrisome look going forward, with a potential pullback on the horizon, the bank wrote in a Monday note.
"The sticky inflation/stronger USD/higher oil/higher bond yields narrative is not good for risk assets," wrote analyst Ajay Rajadhyaksha. "For the first time in a while, both stocks and bonds look set to underperform, in our view."
— Lisa Kailai Han
The three major indexes were on pace to post sizable declines on Monday as the final trading hour commenced.
The S&P 500 and Nasdaq Composite dropped 1.2% and 1.7%, respectively, shortly before 3 p.m. ET. The Dow slipped more than 250 points, which equates to a loss of around 0.7%.
Those slides add to last week's sell-off, which marked the worst weekly performances for the Dow and S&P 500 since the new year began.
All three indexes traded higher earlier in the session. Notably, the Dow was at one point more than 1% in the green.
— Alex Harring
Turmoil in the Middle East could cause dramatic moves in the financial markets, according to U.K. investment bank Liberum Capital, which is calling for oil to surge to $100 and a stock market correction as big as 10%.
"In our base case scenario of Israel retaliating but in a limited way that keeps the conflict from escalating further, this could lead to a 5-10% correction in the stock market together with further strength in the U.S. dollar," Liberum, founded in 2007, said in a note to clients.
The firm revealed the obvious short-term winners, which include defense contractors.
— Yun Li
The S&P 500 tumbled in Monday's session, hurt by a wide range of sliding stocks.
All 11 sectors that comprise the broad index were down shortly before 2:25 p.m. ET. As a whole, the index fell more than 1%.
Real estate was the worst-performing sector with a drop of 1.8%. Communication services and information technology, which are both technology-heavy groups, were the next-biggest losers, as each declined more than 1.5%.
Health care saw the smallest losses of the group, inching down just around 0.1%.
— Alex Harring
The Invesco WilderHill Clean Energy ETF (PBW) fell to its lowest level since 2018 on Monday.
The fund was last down almost 2.5% in the session. At one point in the trading day, it traded at its cheapest price going back to December 2018.
Polestar, a Swedish electric vehicle manufacturer, led the exchange-traded fund down with a drop of about 11%. SunPower and Navitas were the next-biggest losers, falling more than 8% and 7%, respectively.
However, some names were able to buck the fund's slide. Most notably, Piedmont Lithium jumped more than 20%, while SES AI rallied more than 15%.
— Alex Harring, Gina Francolla
Goldman Sachs' post-earnings rally helped mitigate slides seen elsewhere within the Dow.
The financial giant climbed more than 3% during Monday's session. With that gain, it was performing the best of the 30 stocks that comprise the blue-chip average.
Goldman said it earned $11.58 per share on revenue of $14.21 billion in the first quarter, topping respective estimates from analysts polled by LSEG of $8.56 a share and $12.92 billion. The firm was helped by growth in trading and investment banking revenue.
Intel and UnitedHealth were the next-biggest gainers, with each rising more than 2%.
The index was on pace to finish around flat despite those gains, hurt by slides of more than 5% in Salesforce and 1% in Honeywell. But it was still the best performer of the three major indexes in the session.
— Alex Harring
These are some of the names making headlines in midday trading.
For the full list, read here.
— Pia Singh
The iShares MSCI Hong Kong ETF (EWH) dropped 0.7% Monday, falling to its lowest level since December 2011. Casino group Sands China and Galaxy Entertainment led to the downside, with both stocks down around 4.6% and 2.8%, respectively. AIA Group was also down nearly 3% and among the biggest decliners.
Year to date, the exchange-traded fund is down 13.3%, and is down 27.5% over the past 12 months.
— Hakyung Kim, Gina Francolla
Salesforce shares were poised to see their biggest loss in a session going back to late 2022 following acquisition reports.
The software stock dropped more than 5.5% during Monday morning trading, making it the worst performer in the Dow. The last time the stock saw a bigger slide in one day was early December 2022, when shares fell more than 7%.
Monday's retreat came after The Wall Street Journal and Reuters reported that Salesforce is in talks to acquire data management firm Informatica. Despite the pullback, shares are still up more than 5% in 2024.
Salesforce's slide also weighed on the technology-heavy Nasdaq Composite, which was the worst performer of the three major indexes on Monday.
— Alex Harring
The dollar index on Monday hits its highest level since November as the yen weakened and as tensions escalated in the Middle East.
The dollar index hit a high of 106.013, or its best level going back to Nov. 3, 2023, when the index had reached 106.224. The dollar hit a high of 154.4 against the yen, the highest level since June 29, 1990, when the dollar traded as high as 154.58 against the yen.
The dollar also reached a high of 0.9151 against the Swiss franc, which was the highest level since Oct. 6, 2023, when the dollar went as high as 0.9175 against the franc.
— Sarah Min, Gina Francolla
Concerns for traders tied to the Middle East conflict may be coming down after Iran's attack on Israel over the weekend, according to Evercore ISI.
"This remains a dangerous situation, but risks to oil and markets may be a bit less than feared Friday on the eve of the attack," said Krishna Guha, the firm's senior managing director, in a Sunday note.
How Israeli Prime Minister Benjamin Netanyahu will respond to the attack is a key outstanding question, Guha said. The Biden administration has made it clear it does not want Israel to retaliate, he noted.
"Provided that Netanyahu looks like he is willing to follow U.S. advice, there may be some element of a relief rally in markets Monday," Guha said. "However, our colleagues in the energy team do not expect a big retracement in the price of oil."
— Alex Harring, Hakyung Kim
Tesla shares were down more than 3% after the electric vehicle maker said it would lay off more than 10% of its global workforce.
"There is nothing I hate more, but it must be done. This will enable us to be lean, innovative and hungry for the next growth phase cycle," CEO Elon Musk said in a memo.
— Fred Imbert
Stocks kicked off Monday's trading session in the green as Wall Street looked to rebound off last week's sell-off.
The Dow traded more than 350 points higher, which equates to about 1%, shortly after 9:30 a.m. ET. The S&P 500 and Nasdaq Composite rose 0.8% and 0.5%, respectively.
— Alex Harring
The three major indexes have ground to make up after last week's drops.
The Dow fell more than 2%, marking its second down week in a row and biggest loss since March 2023. A sizable chunk of that sell-off came Friday, when the blue-chip index tumbled around 475 points.
The S&P 500 ended the week lower by about 1.5%, its worst performance since October 2023. Friday saw the biggest drop for the broad index since January.
The technology-heavy Nasdaq Composite finished almost 0.5% in the red. That was its third straight losing week, a negative streak last seen in October 2023.
— Alex Harring
Shares of Trump Media plunged more than 17% during premarket trading after the company filed to issue millions of additional shares of stock.
The company behind the Truth Social app said in a filing that it will issue up to an aggregate of 21,491,251 shares of its common stock, which trades under DJT on the Nasdaq.
— Yun Li