Stocks fall mostly ahead of data-rich week, Nasdaq drops as Treasury yields rise

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Stocks fell on Monday as traders waited for new economic and earnings data this week to confirm or allay concerns about supply chain challenges, inflation and the pace of the labor market recovery.

The S&P 500 fell more than 1%. Last Friday, the first day of October and the fourth quarter, the blue chip index recorded its best start to the month since 2007 with a jump of 1.2%. Still, the index posted a weekly loss of 2.2%, or its worst since February, after stocks routed earlier in the week.

The Nasdaq underperformed the other two major indices, falling more than 2% intraday as Treasury yields climbed. The benchmark 10-year yield hovered just below 1.5% as rising rates pushed big names in tech and growth down. Facebook shares fell more than 5% and were on track for their worst day in nearly a year, while Amazon shares have turned negative for 2021 so far.

Stocks are struggling to regain a foothold after a massive sell off in September, as many of the concerns that sparked last month’s decline have persisted. In Congress, lawmakers have yet to agree on a solution to raising the debt ceiling and avoiding a possible government default, or an outcome that could occur as early as mid-month and spawn “a financial crisis and recession. economic”. Treasury Secretary Janet Yellen warned last week.

Nervousness over ongoing supply chain disruptions and rapidly rising inflation have also been at the center of concern, particularly after Friday’s US Personal Consumption Expenditure (PCE) report. . reflects the fastest annual rise in inflation since 1991. And later this week, traders receive the monthly employment report from the Ministry of Labor for September, which is expected to show at least modest acceleration in employment growth after a august report. But after a strong run of economic data earlier this year, many pundits are bracing for decelerating growth and potential data disappointments through the end of the year.

“We’ll kind of have to work our way through some of the negative numbers that we’re likely to see, but I think the market will look through that valley,” Sam Stovall, US equity strategist for CFRA Research, told Yahoo Finance Live on Friday.

And while only a handful of companies are releasing their quarterly results this week, the impressions will help set the tone ahead of the official start of the third quarter earnings season with the big banks next week.

Wall Street consensus analysts on Friday forecasted profit growth of just over 27% for the S&P 500 for the third quarter, according to FactSet. This would represent a marked slowdown from the 88% pace in the second quarter, but remains the third highest year-on-year growth rate since 2010 for the index.

“As stock valuations come under scrutiny amid the rapid rise in real rates, investor attention will increasingly assess whether earnings growth can continue to pull the market higher,” wrote Goldman Sachs equity strategist David Kostin in a note. He said the four key areas investors should watch out for in management reports and comments this earnings season relate to supply chains, oil, labor costs and growth in China.

“We expect consensus estimates to rise, but believe the frequency and magnitude of BPA [earnings per share] the beats will moderate from 1H 2021, “Kostin added.

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1:08 p.m. ET: UBS sees ‘pretty substantial rise’ from consensus estimate for third quarter earnings

Although the first full week of October starts off on a low note for stocks, some strategists are still adopting an optimistic tone about the path for US stocks going forward.

“We feel a lot more positive heading into September,” Stuart Kaiser, head of equity derivatives research for UBS.Yahoo Finance Live said Monday. “In September, you had a lot of risk with the economic data, related to the uncertainty of what the Fed would do. And I think in a very rational way, a lot of institutional investors hedged their portfolios, reduced the risk and have been really handpicked. of prepared for a negative month. “

“Now that it has passed us … and the gains [are] ahead of us we see a pretty substantial hike in consensus estimates for third quarter earnings, ”he added. over the next two to four weeks if successful markets return to all-time highs. ”

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10:13 a.m. ET: Amazon stocks turn negative for 2021 as big tech spinning resumes

Amazon (AMZN) stocks have dipped into the red since the start of the year, with shares of the ecommerce giant losing more than 0.8% in intraday trading in 2021 as traders shy away from growth and tech stocks which had driven the market higher last year. . Amazon stocks had risen 76.3% in 2020, making it one of the best performing stocks among so-called FAANG Big Tech stocks.

The S&P 500 consumer discretionary sector, which includes Amazon, was the third worst performing sector in the index this year.

Other big names in technology have also returned gains in 2021.

Apple shares have only risen 6% so far this year after rising 81% in 2020. Netflix, a home-based retail darling, has only risen 12% after rising 67%. % from last year.

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10 a.m. ET: Factory orders topped estimates in August

US Manufactured Product Orders increased more than expected in August, accelerating from July even as supply chain challenges weighed on the overall pace of growth in the goods-producing sector.

Factory orders rose 1.2% in August month over month, according to data from the Ministry of Commerce Monday. That was faster than the expected 1.0% rise, according to Bloomberg consensus data, and represented a fourth consecutive monthly advance. Factory orders rose 0.7% in July, this figure being revised up from 0.4% previously announced.

August’s increase came as orders increased for a wide range of manufactured goods, including machinery, refrigeration equipment and heavy trucks. Excluding transportation-related orders, factory orders were still up 0.5% in the month, beating estimates by 0.4%.

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9:30 a.m. ET: Stocks open slightly lower, Nasdaq underperforms

Here’s where the markets were trading on Monday morning:

S&P 500 (^ GSPC): -11.68 (-0.27%) to 4,345.36
Dow (^ DJI): -63.22 (-0.18%) to 34,263.24
Nasdaq (^ IXIC): -69.34 (-0.48%) to 14,497.35
Raw (CL = F): + $ 1.23 (+ 1.62%) to $ 77.11 per barrel
Gold (CG = F): – $ 6.30 (-0.36%) to $ 1,752.10 per ounce
10-year cash flow (^ TNX): +2.4 bps for a yield of 1.491%

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9:07 am ET: Qualcomm and SSW Partners announce plans to buy automotive technology company Veoneer

Semiconductor company Qualcomm (QCOM) and investment partnership firm SSW Partners have announced an agreement to purchase automotive technology firm Veoneer (VNE) Monday morning.

The purchase will include a cash transaction of $ 37.00 per Veoneer share, giving the company an equity valuation of $ 4.5 billion. Upon closing of the deal, Qualcomm will receive Veoneer’s business Arriver, or driver assistance software, while SSW Partners will acquire the outstanding share capital of Veoneer.

Veoneer’s shares gained 4% after the announcement, while Qualcomm’s shares edged down.

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