Stocks declined on Monday due to a spike in Treasury yields, raising concerns that the Federal Reserve may not implement as significant rate cuts as initially anticipated. Additionally, disappointing results from McDonald’s contributed to a decrease in investor confidence.
The Dow Jones Industrial Average fell by 274.30 points, or 0.71%, closing at 38,380.12. The S&P 500 also dipped by 0.32% to finish at 4,942.81, while the Nasdaq Composite saw a slight decrease of 0.2% to conclude the day at 15,597.68.
The 10-year Treasury note yield surged by over 13 basis points to 4.166%, reflecting investor assessment of positive economic data signaling the likelihood of prolonged elevated rates. Just last week, the benchmark yield stood at around 3.81%.
Truist’s co-chief investment officer, Keith Lerner, noted, “It’s a recalibration of expectations around how soon the Fed will pivot. The tension between a robust economy and its implications for the Fed is expected to continue driving these corrective market movements.”
Following statements made after the Federal Reserve’s January policy meeting, Chairman Jerome Powell reiterated on Sunday that a rate cut in March was improbable. Market expectations for rate cuts have diminished since these remarks, with the likelihood of a cut next month currently standing at 16.5%, according to CME Group’s FedWatch Tool.
Source (CNBC)
