U.S. stocks experienced a downturn on Monday afternoon as investors analyzed the latest economic data and anticipated the forthcoming consumer and producer price inflation reports later in the week. Additionally, increased tensions in the Middle East contributed to a cautious market atmosphere.
Investor sentiment was also tempered by the anticipation of earning reports from major banks due this week. Following Friday's positive employment figures, traders are now predicting only a quarter-point reduction in interest rates at the Federal Reserve's forthcoming policy meeting on November 7th, with a minor possibility of rates remaining unchanged.
On the geopolitical stage, Israeli defense forces escalated their air strikes on Gaza and Beirut as commemorations took place for the first anniversary of Hamas' cross-border aggression into Israel, which ignited the ongoing conflict in the Middle East.
According to information from Gaza's Hamas-operated health ministry, air strikes on a mosque and a decommissioned school — both repurposed as refugee relief shelters — resulted in several fatalities on Sunday. The Israeli military reported that Hamas militants were concealed within these locations.
Major U.S. indices recorded significant declines. The Dow Jones Industrial Average decreased by 326.89 points, or 0.77%, to 42,025.86; the S&P 500 dropped 32.41 points, or 0.56%, to 5,718.97; and the Nasdaq fell by 98.71 points, or 0.54%, to 18,039.14.
Shares of leading corporations such as Apple Inc., Alphabet, Amazon, Meta Platforms, Berkshire Hathaway, Tesla, Walmart, Visa, Mastercard, Netflix, Merck, Accenture, American Express, and Nike saw reductions between 1 to 3 percent. Conversely, NVIDIA Corporation saw an increase exceeding 4 percent, while Micron Technology, Pfizer, Exxon Mobil, and Eli Lilly also performed well.
The market is also looking ahead to speeches from several Federal Reserve officials today. Minneapolis Federal Reserve President Neel Kashkari is scheduled for a question-and-answer session at the Bank Holding Company Association Fall Seminar. Atlanta Federal Reserve President Raphael Bostic will moderate a discussion on the "Dynamic Business of Professional Sports" as part of the Atlanta Fed's Leading Voice Series at 6 PM ET. Meanwhile, St. Louis Federal Reserve President Alberto Musalem is slated to speak on the U.S. economy and monetary policy during an event with the Money Marketeers of New York University Inc. at 6:30 PM ET.
The Federal Reserve will also release its consumer credit report for August, with expectations of a $12.0 billion increase in consumer credit.
Asian markets rallied on Monday, and the dollar reached a new seven-week high against the yen after strong U.S. employment data indicated economic robustness, leading traders to scale back expectations for aggressive cuts to Federal Reserve interest rates.
Major European markets closed positively on Monday, bolstered by strong Asian performances and upbeat U.S. employment figures, which supported investor sentiment. However, concerns about increasing tensions in the Middle East and anticipation of significant economic data, such as the U.S. consumer price inflation figures, restricted further market gains.