Stocks Powered Ahead On Wall Street and U.S. Treasury Yields Rebounded

Barry Adams
16 Oct, 2023
New York City

Stocks on Wall Street advanced as investors focused on earnings and bond yields gains amid rising geopolitical tensions. 

Benchmark indexes advanced in Monday's trading and investors looked ahead to a fresh batch of earnings including quarterly updates from Bank of America, Tesla, Netflix and Johnson & Johnson. 

The S&P 500 index and the Nasdaq Composite index jumped more than 1% and extended previous week's gains on earnings optimism, despite the rise in Treasury yields and elevated crude oil prices.  

Crude oil prices remained elevated on the worries of widening war in the Middle East as Israel prepares for its ground offensive in Gaza and the United Nations warned of an impending humanitarian crisis in the region. 

At least 500,000 Gaza residents have left northern Gaza as Israel prepares for its bombing campaign and ground invasion in addition to shutting off the supply of electricity and water to the occupied territory. 

There are at least 2.5 million people living in Gaza and about half of the residents are women and children.  

 

U.S. Indexes & Yields 

The S&P 500 index increased 1.1% to 4,375.54 and the Nasdaq Composite added 1.3% to 13,575.16. 

The yield on 2-year Treasury notes increased to 5.10%, 10-year Treasury notes inched higher to 4.70% and 30-year Treasury bonds edged up to 4.86%. 

Crude oil decreased $1.20 to $86.48 a barrel and natural gas prices eased 12 cents to $3.11 a thermal unit. 

The dollar index edged higher to 106.48, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.  

 

U.S. Stock Movers 

Big banks were in focus on the second day after Wells Fargo, Citigroup and JPMorgan Chase reported stronger-than-expected earnings. 

Rite Aid Corp declined 6% to 61 cents after the drug retailer filed for bankruptcy protection as the company struggled under the weight of hundreds of cases linked to opioid prescriptions. 

Pfizer Inc gained 4.5% to $33.69 after the pharmaceutical company lowered its annual revenue guidance. 

Pfizer revised lower its 2023 revenue in the range between $58 billion and $61 billion, from the previous estimate between $67 billion and $70 billion on the weakening demand for its Covid products. 

The company also lowered its full-year adjusted earnings per share outlook to a new range of $1.45 to $1.65 from the previous estimate between $3.25 and $3.45. 

Lululemon Athletica soared 10.7% to $418.25 ahead of the company's addition to the S&P 500 index later in the week. 

Charles Schwab Corporation increased 4.2% to $53.49 after the online brokerage firm reported mixed quarterly results.

Net revenue in the third quarter ending in September declined 16% to $4.6 billion from $5.5 billion and net income plunged 44% to $1.1 billion from $2.0 billion and diluted earnings per share dropped to 56 cents from 99 cents a year ago. 

Net interest revenue declined 24% to $2.2 billion but advised solution and asset management fees jumped 17% to a quarterly record of $1.2 billion.  

 

European Markets Struggled After Bond Yields Advanced 

Stocks across Europe struggled and market indexes traded near flatline in Monday's trading. 

Benchmark indexes In London, Paris and Frankfurt struggled to gain traction and bond yields advanced in the region. 

Investors turned cautious on the worries of  higher interest rates, looming global economic slowdown and impending Israel's invasion in Gaza as early as this week. 

Natural gas prices stayed elevated on the supply worries after Israel asked Chevron to halt natural gas production at fields located near its northern shores. 

Closer to home, German wholesale prices dropped for the sixth month in a row and declined 4.1% in September, following a 2.7% decline in August, the Federal Statistics office or Destatis reported Monday. 

The measure of wholesale price declined after petroleum products prices eased from a higher price base in the month a year ago. 

 

Euro Area Goods Trade Balance Swung to Surplus 

The Euro Area goods trade balance swung to a surplus of Є6.7 billion in August from a Є54.4 billion deficit in the month a year ago. 

Exports declined 3.9% to Є221.6 billion and imports plunged 24.6% to Є214.9 billion.

In the first eight months of the year, international trade deficit declined to Є9.8 billion from Є311.4 billion and the surplus with the U.S. rose to Є100.2 billion from Є98.3 billion in the corresponding period a year ago. 

 

Europe Indexes & Yields

The DAX index increased 0.4% to 15,237.99, the CAC-40 index rose 0.3% to 7,022.19 and the FTSE 100 index added 0.4% to 7,630.69.

In the previous week, the DAX index increased 1.1%, the CAC-40 index advanced 0.8% and the FTSE 100 index edged higher 1.4%. 

The yield on 10-year German bonds decreased to 2.79%, French bonds traded higher to 3.42%, the UK gilts edged up to 4.47% and Italian bonds rose to 4.87%.

The euro edged lower to a three-month low to $1.053, the British pound to $1.215 and the U.S. dollar fetched 90.24 Swiss cents.

Brent crude decreased $1.04 to $89.84 a barrel and the Dutch TTF natural gas edged lower by €5.54 to €48.47 per MWh.

 

Europe Stock Movers

Resource stocks were in focus on the hopes that demand growth from China would recover after the People's Bank of China offered additional liquidity to the banking system. 

Anglo America, Glencore and Antofagasta advanced between 1% and 2% after base metal prices advanced. 

BioNTech SE dropped 7.7% to €93.14 after the German biotech company said it plans to take a one-time charge to write-down assets worth €900 million in the third quarter. 

GSK Plc declined 1.2% to 1,491.60 pence despite the European Medicines Agency's drug approval committee offering a positive view on its intravenous cancer treatment therapy Jemperli.