US stocks experienced a significant decline on Monday, largely due to the surge in bond yields. The yield on the 10-year US Treasury reached 5%, a level not seen since July 2007. This increase in yields has been driven by concerns over US debt and the potential impact of tighter financial conditions. The recent Treasury bond crash has also contributed to the surge in yields. However, despite these concerns, the market is expecting the Federal Reserve to maintain its current interest rate levels, with traders pricing in a 98% chance of no rate hikes at the next policy meeting in November.
Investors are also eagerly awaiting third-quarter earnings reports, with around 40% of S&P 500 companies set to release their financials this week. Notably, mega-cap tech giants such as Alphabet, Microsoft, Meta, and Amazon are among those reporting. These earnings reports could have a significant impact on market sentiment and further influence stock prices.
As for the market performance on Monday, the S&P 500 was down 0.34%, the Dow Jones Industrial Average declined 0.42%, and the Nasdaq Composite dropped 0.35%. In other news, author Robert Kiyosaki echoed Warren Buffett's warning about trying to time the market, emphasizing the importance of dollar-cost averaging. Tesla also experienced a challenging week, with its stock plunging 16% following Elon Musk's earnings-call nightmare.
In commodities, oil prices slipped, with West Texas Intermediate falling 0.84% and Brent crude declining 0.92%. Gold prices were down 0.19%, while the 10-year Treasury yield climbed 4 basis points to hover around 4.972%. Bitcoin saw a modest increase of 2.6% to reach $30,697.
Overall, the decline in US stocks and the surge in bond yields have raised concerns among investors. However, the market remains hopeful that the Federal Reserve will maintain its current interest rate levels. The upcoming earnings reports, particularly from major tech companies, will be closely watched and could have a significant impact on market sentiment moving forward.