As traders braced for the final week of a volatile September, U.S. stocks were mixed on Monday as Treasury yields rose.
The blue-chip S&P dropped by 0.28% to 4,443.11 while the tech-heavy Nasdaq Composite slipped 0.52% to close at 14,969.97 as tech stocks struggled to find their footing. The Dow Jones Industrial Average rose by 71.37 points to 34,869.37 as energy stocks and bank shares went through the roof.
The split in the market comes as the 10-year Treasury yield rose. Poised by economic optimism and inflation fears, Treasury yields topped 1.5% on Monday, the highest since June and up from 1.30% at the end of August.
The economic recovery trade was also supported by stronger-than-expected reading for durable goods orders on Monday.
Tech stocks drag down the market
Leading tech stocks including Apple, Alphabet, and Nvidia were down in Monday’s session, weighing on the S&P 500 and Nasdaq. For one thing, tech stocks are sensitive to rising yields because increased debt costs can hinder their growth and higher rates can make their future cash flows less valuable.
However, stocks tied to economic recovery increased as tech shares fell with U.S. COVID-19 cases continuing to roll over. Over the last week, the number of U.S. cases averaged about 120,000 per day, down from early September.
Carnival Corp added 3.7%, United Airlines rose 0.6% while shares of Boeing jumped 1.3%.
The rise in yields also boosted financial stocks on Monday. The KBW Bank Index climbed 2.9% while shares of Goldman Sachs and JPMorgan Chase rose more than 2%, making them some of the best performers in the Dow.
Energy stocks also shone bright, with Exxon Mobil and Occidental Petroleum climbing as WTI crude continued its September run, reaching $75 a barrel. Prices of natural gas were also up on Monday as investors were concerned about an energy shortage in Europe.
Early last week, stocks pulled back amid a slew of concerns from China’s real estate giant Evergrande, to the Fed’s signal to rollback in monetary stimulus, and to Beijing’s crackdown on cryptocurrencies.
The major averages managed to wipe out those losses and eke out small gains for the week, but all three are still on track to finish down for the month of September.
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