- Fed Governor Michelle Bowman expressed her willingness to support a future hike.
- There was a smaller-than-expected decline in US factory activity in September.
- S&P 500 companies will begin reporting third-quarter results later this month.
US equities ended mixed on Monday, with the S&P 500 nearly flat and Nasdaq higher. Investors assessed the possibility of the Fed keeping interest rates high for an extended period.
The Nasdaq increased as Nvidia’s shares rose by 2.9% after Goldman Sachs included the chipmaker in its list of preferred stock picks.
Meanwhile, Fed Governor Michelle Bowman expressed her willingness to support a future increase in the central bank’s policy interest rate if forthcoming data indicates that inflation is stagnating or progressing too slowly. Last month, the US central bank hinted at the possibility of raising rates again in its struggle to bring inflation closer to its 2% annual target.
Quincy Krosby from LPL Financial in Charlotte, North Carolina, commented on the uncertain market at the end of September. All three major indexes recorded losses for the month and the last quarter. Investors will seek confirmation of increasing earnings in the new month and closely watch the Federal Reserve’s direction.
Moreover, rising Treasury yields continue to be a focal point for investors. However, Monday’s yield increase was linked to an agreement to avoid a partial US government shutdown, reducing demand for debt ahead of this week’s crucial jobs data.
US manufacturing PMI (Source: Institute for Supply Management)
Economic indicators showed a smaller-than-expected decline in US factory activity in September and an increase in US construction spending in August. Investors are eagerly anticipating the monthly US jobs report due on Friday.
S&P 500 companies will begin reporting third-quarter results later this month, with analysts anticipating a 1.6% increase in earnings compared to last year.
Elsewhere, European equities started the final quarter negatively, as higher bond yields exerted pressure on equities. Additionally, data indicated that manufacturing activity in the Eurozone remained in a widespread downturn, with demand shrinking at a rate rarely seen since data collection began in 1997.
London stocks initially gained ground on Monday but ended the day in negative territory as surging yields exerted downward pressure on equities.
The yield on the UK’s 10-year benchmark note soared to its highest since August 23, reaching 4.57%. This rise was part of the ongoing sell-off in the global debt markets amid concerns about central banks maintaining higher interest rates for an extended period.