Stocks closed the day mixed, with significant rotations taking place as the market recalibrated to the new environment while digesting new information. Conflicts escalated in the Middle East over the weekend and extended into Monday. On the one hand, the Iranian leader was confirmed killed; on the other hand, the world’s largest liquid natural gas export facility was shut down by QatarEnergy, causing a significant surge in natural gas and oil prices.
The market overall remains in a wait-and-see mode, with no significant movement in the major indices. The Dow Jones Industrial Average declined 73 points to 48,905. The NASDAQ rose 0.13% to 24,993. The S&P 500 ticked up 0.04% to 6,882. Meanwhile, energy stocks rose significantly in response to higher oil and natural gas prices. Industrials, a sector containing many defense contractors, also posted meaningful returns. Technology stocks, with AI becoming more integrated into the military, also benefited. Most other sectors ended the day in the red.
The bond market was more concerned with inflation than with potentially slower economic growth, with yields jumping significantly. The U.S. 5-year Treasury yield rose 10 basis points to 3.61%, and the 10-year yield rose 8 basis points to 4.04%.
Let’s move on to economic data. We have manufacturing Purchasing Managers’ Index (PMI) reports available. For the second straight month, U.S. manufacturing has expanded. The report suggested that orders and production are rising. Employment was stagnant again, however, with headcount management being a priority for many executives. Higher prices, especially for steel and aluminum, continued to be problematic.
There will be very little economic data tomorrow, but with the new developments in the Middle East, we will likely have plenty to cover.
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