U.S. stocks ended the session little changed Monday as investors grappled with rising bond yields and a mixed bag of earnings reports.
The closely watched yield on the 10-year Treasury note climbed, settling just below the psychologically important 3% level.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.06% ended 14.25 points, or less than 0.1%, lower at 24,448.69, closing with losses for a fourth straight session.
The S&P 500 index SPX, +0.01% closed virtually unchanged at 2,670.29, with six of its 11 main sectors finishing in positive territory.
The Nasdaq Composite Index COMP, -0.25% shed 17.52 points, or 0.3%, to 7,128.60.
What’s driving markets?
Bond yields, which are reflecting a rise in inflation expectations, were on the march higher Monday, a continuation of gains logged last week. The 10-year Treasury note yield TMUBMUSD10Y, -0.28% hovered around 2.9729%, the highest level since January 2014, but had moved above 2.995% at one point.
The advance in U.S. interest rates has come as traders increasingly start to price in four interest-rate hikes in 2018 from the Federal Reserve, rather than the three signaled by policy makers. On Friday, traders on the fed-fund futures market saw a 38% chance of four hikes this year, compared with a 24.5% chance on April. 11.
What are strategists saying?
“The fact that we backed off the 3% level on the 10-year has probably giving stocks a slight reprieve, but we are watching these levels closely,” said Mark Kepner, managing director of sales and trading at Themis Trading.
While strong earnings results should keep stocks underpinned in the short term, investors should not “drop their guard” given the charge higher for U.S. bond yields, said Konstantinos Anthis, head of research at ADS Securities.
“Even a small deterioration in sentiment could trigger a selloff for global equities as yields threaten the upside potential,” he said in a note to clients.
What stocks are in focus?
Hasbro Inc. HAS, +4.00% shares recovered from an earlier drop to close 4% higher even after the toy maker’s adjusted profit and sales missed expectations.
Kimberly Clark Corp. KMB, -1.51% shares fell 1.5% even as the company’s earnings beat expectations.
Shares of Alcoa Corp AA, -13.51% slumped 14% as the Treasury Department said it’s extended its wind-down period for dealing with Rusal, the sanctioned Russian aluminum giant controlled by Oleg Deripaska.
Shares of Arconic Inc. ARNC, -5.20% , which was spun off from Alcoa Corp, fell 5.2%.
Shares of Box Inc. BOX, +10.94% jumped 11%, the most since making its debut as a publicly traded company, after Social Capital’s Chamath Palihapitiya made a bullish call on the company.
Shares of Akorn Inc. AKRX, -33.76% tumbled 34% after German health-care group Fresenius SE FRE, +0.00% said Sunday that it is terminating its $4.3 billion agreement to buy the generic-drug maker.
Vectren Corp. VVC, +7.26% rose around 7.3% on news that CenterPoint Energy Inc. CNP, -2.77% will acquire the energy-holding company for $72 a share.
Shares of Henry Schein Inc. HSIC, +6.83% jumped 6.8% after the company said it plans to spin off its animal-health business for an expected $1 billion to $1.25 billion in tax-free cash.
What are the economic data?
The Chicago Fed national activity index for March declined to 0.10 from 0.98 in February.
Preliminary readings of the manufacturing and services purchasing managers’ indexes for April showed that IHS Markit flash manufacturing PMI rose to 56.5 in April from 55.6, while the flash reading for services showed a climb to 54.4 in April from 54.0.
Meanwhile, existing-home sales increased 1.1% in March from the previous month to a seasonally annual rate of 5.60 million, the National Association of Realtors said Monday. Economists surveyed by The Wall Street Journal had expected a sales rate of 5.55 million last month.
What are other markets doing?
European stocks SXXP, +0.35% SXXP, +0.35% finished at the highest level in about 10 weeks as banks benefited from rising rates. Asian markets US:CLK8 largely fell across the board, with continued losses for Taiwan Semiconductor Manufacturing Co. TSM, -0.51% 2330, -0.66% .
Gold futures GCM8, +0.15% settled 1.1% lower at $1,324 an ounce, while the ICE U.S. Dollar Index DXY, +0.10% jumped to a three-month high of 90.935 as bond yields climbed.
Crude-oil prices CLM8, +0.31% settled at $68.64 a barrel, up 24 cents, or nearly 0.4%.
