The Dow Jones Industrial Average moved higher Monday as Wall Street tried to start the new month, and quarter, on a solid note.
The blue chip stock index jumped 330 points higher, or 1.1%. The S&P 500 rose 1%, and the Nasdaq Composite gained 0.7%. Those moves came as the yield on the 10-year U.S. Treasury noterolled over. It rose the end the previous week, as stocks tumbled, but still finished 18 basis points down from its mid-week high.
“It’s pretty simple at this point, 10-year Treasury yield goes up, and equities likely remain under pressure,” Raymond James’ Tavis McCourt said. “It comes down, and equities rally.”
Wall Street is coming off a tough month, with the Dow and S&P 500 notching their biggest monthly losses since March 2020. The Dow on Friday also closed below 29,000 for the first time since November 2020.
The Dow shed 8.8% in September, while the S&P 500 and Nasdaq Composite lost 9.3% and 10.5%, respectively.
For the quarter, the Dow fell 6.66% to notch a three-quarter losing streak for the first time since the third quarter of 2015. Both the S&P and Nasdaq Composite fell 5.28% and 4.11%, respectively, to finish their third consecutive negative quarter for the first time since 2009.
As the new quarter kicks off, all S&P 500 sectors sit at least 10% off their 52-week highs. Nine sectors finished the quarter in negative territory.
In the fourth quarter, elevated inflation and a Federal Reserve intent on bringing surging prices to a halt regardless of what it means for the economy will likely continue to weigh on markets, said Truist’s Keith Lerner. Oversold conditions, however, also make the market vulnerable to a sharp short-term bounce on good news, he added.
“I think we could be set up for some type of reprieve but the underlying trend at this point is still a downward trend and choppy waters to continue,” Lerner said.
On the economic front, Markit PMI and ISM manufacturing data are slated for release on Monday along with construction spending.