NEW YORK: Wall Street lost ground on Monday, retreating after a strong rally the previous week, as investors awaited earnings from major companies to gauge whether equities would sustain their recent run to record highs.
A jump in Treasury yields added pressure, with the yield on the benchmark 10-year bond rising as high as 4.17%, a 12-week high.
Most rate-sensitive megacap technology stocks slipped, with Tesla down 1%, and Microsoft and Meta Platforms both losing 0.7%.
The Dow Jones Industrial Average fell 323.49 points, or 0.75%, to 42,952.42, the S&P 500 lost 24.97 points, or 0.43%, to 5,839.70, and the Nasdaq Composite lost 29.52 points, or 0.16%, to 18,460.03.
After a fairly upbeat start to earnings season, the focus is on the 114 S&P 500 companies that are scheduled to report results this week. These include Tesla, Coca-Cola and Texas Instruments.
“There’s always a degree of caution going into the heart of earnings season... there are some underlying factors in the market that are generally positive, but I’d say that’s just being overshadowed here by earnings,” said Tim Ghriskey, senior portfolio strategist with Ingalls & Snyder.
“We’re seeing yields across the board going up a bit here. There’s been some nervousness about some of economic data we’ve seen recently.”
Of the companies that have reported so far, 83.1% beat earnings estimates, according to data compiled by LSEG on Friday.
Some traders were likely booking profits, Ghriskey said.
The three major indexes logged a sixth consecutive week of gains on Friday, their best winning streak so far this year, while the Dow and the S&P 500 both closed at record highs.
Monday’s declines were broad, with almost all 11 major S&P 500 sectors in the red, barring a slight rise in Information Technology.
The rate-sensitive Real Estate sector dropped 1.9% as yields rose, while the technology sector was lifted by a 2.3% jump in chip heavyweight Nvidia, which briefly touched a fresh record high.
The economically sensitive small-cap Russell 2000 dropped 1.4%.
Investors also looked ahead to the upcoming US presidential election, with polls showing the chances improving for former President Donald Trump.
“As the election date approaches, even small changes in tight polls could drive seemingly erratic swings in market sentiment,” Danske Bank analysts said.
Meanwhile, Boeing jumped 3% after news that workers could vote on a new deal to end a costly five-week-long strike.
Spirit Airlines skyrocketed 66.7% after the company reached an agreement to extend a debt refinancing deadline by two months.
Humana slipped 1.5% after a report said Cigna had resumed merger talks with the health insurer. Cigna’s shares lost 4.4%.
Fed officials Neel Kashkari, Jeffrey Schmid and Mary Daly are scheduled to speak on the day.