Stock Market Update: Mixed Results Amid Rising Treasury Yields

Date: October 21, 2024

The U.S. stock market closed on a mixed note on Monday as investors reacted to a rise in the 10-year Treasury yield and braced for a busy week of corporate earnings reports that hold the potential to influence market trends. Overall, the S&P 500 Index experienced a slight decline, while the tech-heavy Nasdaq Composite showed modest gains.

Market Performance Insights

The S&P 500 (^GSPC) fell by nearly 0.2%, continuing its descent after reaching an all-time closing high just days earlier. Similarly, the Dow Jones Industrial Average (^DJI) dropped over 300 points, registering a decline of approximately 0.8%, thereby snapping a three-day winning streak. In contrast, the Nasdaq Composite (^IXIC) rose by 0.2%, partly buoyed by the performance of semiconductor and tech giants.

One notable highlight from the trading session was Nvidia (NVDA), which surged more than 4% to achieve a fresh all-time high. The iPhone maker Apple (AAPL) also closed at a record level, reflecting the ongoing enthusiasm surrounding top-tier technology stocks. Meanwhile, the 10-year Treasury yield (TNX) climbed 10 basis points to 4.18%, reaching its highest point since July—a factor that influenced the performance of interest rate-sensitive stocks today.

Earnings Season Takes Center Stage

As the earnings season ramps up, over 100 companies from the S&P 500 are set to report their quarterly results this week, and investors are keenly awaiting these updates. So far, around 80% of reports from S&P 500 companies that have released their third quarter earnings have exceeded Wall Street expectations.

A key focal point for investors will be Tesla’s (TSLA) upcoming earnings report on Wednesday, particularly following the company’s recent robotaxi unveiling, which did not meet market expectations. Tesla is positioned as one of the week’s standout reports amidst broader questions regarding the performance of major technology firms, despite Netflix’s (NFLX) solid start to this earnings season.

Notable companies also slated to release earnings include General Motors (GM), Coca-Cola (KO), American Airlines (AAL), and UPS (UPS). Additionally, Boeing (BA) is facing a dual challenge on Wednesday, as it prepares to announce its earnings alongside a vote by its workers on a tentative agreement to end a five-week strike. Shares of Boeing were up over 3% on Monday, reflecting optimism ahead of the report.

Trends in Earnings Reactions

A recent trend has emerged in the stock market regarding how companies’ earnings results are impacting their stock prices. According to research from Bank of America, companies reporting earnings beats are receiving greater rewards than usual. In a notable shift, firms that surpass both revenue and earnings expectations are experiencing an average stock increase of 3.15%, a notable uptick compared to the historical average of 1.49% since 2000. Conversely, companies that miss expectations are witnessing a decline in stock value that is less severe than historical averages.

Conclusion

The stock market’s mixed performance on Monday illustrates the ongoing volatility as investors navigate rising Treasury yields and prepare for critical earnings reports. With significant announcements on the horizon, the impact of these corporate results could significantly shape market direction in the upcoming days. As earnings season unfolds, investors remain cautiously optimistic amid macroeconomic uncertainties.

For further updates and in-depth analysis, stay tuned to Smart Money Mindset.