S&P 500 rises as 10-year Treasury yield dips back below key 5% level: Live updates

Bank of America thinks the Federal Reserve could deliver one last interest rate hike before the end of the year, though it is hedging its bets a bit.

The bank’s economists see the Fed skipping a hike when its upcoming meeting concludes Nov. 1, but then going ahead with a move in December if the economic data flow holds up.

“We shift the last rate hike in our forecast out to December. We think the strong September data keep another hike in play. But it is a close call,” BofA economist Michael Gapen said in a client note. “There are meaningful risks that the Fed will either delay the last hike into 2024 or not hike again.”

Markets pricing disagrees with the call: Traders are assigning a complete certainty that the Fed will not move in November, while putting just a 24% probability on a December hike, according to CME Group data.

—Jeff Cox

Walgreens was the top performer in the Dow on Monday, rising nearly 5% on the heels of a bullish call from JPMorgan.

Analyst Lisa Gill wrote upgraded the stock to overweight from neutral and raised her target price. She said the company, whose stock has fallen more than 40% this year, should have a “cleaner year ahead.”

“We believe that while there is clearly work to be done, with a refreshed healthcare-focused management team and a lowered but credible bar that WBA has an opportunity to remove several overhangs in the coming quarters and improve performance,” Gill told clients.

Despite the rally in Walgreens shares, the Dow as a whole traded around flat.

— Alex Harring

Investors soured again on funds tied to sustainability in the third quarter, yanking $2.7 billion as pressure built on strategies tied to environment, social and governance factors.

The redemptions in the July-through-September period brought the total outflows in 2023 to $14.2 billion, according to Morningstar. The total money pulled accounted to 0.85% of total assets, compared to outflows of 0.02% for all U.S. funds.

Morningstar attributed the outflows to multiple factors, including worries about the economy and the macro investing environment, as well as “ESG-specific factors such as political backlash.” Most of the redemptions came from BlackRock’s iShares ESG Aware MSCI USA ETF, which saw outflows of $2.1 billion.

—Jeff Cox

With the S&P 500 trading below its 200-day moving average, a $2 billion ETF is nearing the trigger point that would cause it to sell stocks.

The Pacer Trendpilot US Large Cap ETF (PTLC) has several technical indicators that cause an automatic shift in the portfolio. When the S&P 500’s total return index closes below its 200-day moving average for five-straight days, the fund will shift from 100% stocks to half stocks and half Treasury bills.

The PTLC is just one example of different types of funds and investment strategies that are poised to make moves now that the S&P 500 has crossed below the key moving average indicator.

Read more about the fund on CNBC Pro.

— Jesse Pound

Check out the companies making headlines in midday trading.

Chevron — Chevron shares fell 3% after the energy giant agreed to buy Hess in a $53 billion all-stock deal, or $171 per share. The acquisition allows Chevron to develop drilling in Guyana, and it comes approximately two weeks after Exxon Mobil acquired Pioneer Natural Resources in a $59.5 billion all-stock deal.  

Okta – Okta’s stock shed 8%, building on an 11.6% loss during Friday’s session after the cybersecurity firm said hackers accessed its support system and viewed client files. Both Citi and Evercore ISI said that the company could suffer in the near term from the attack.

Pinterest — The digital platform’s shares added 2% on the back of an upgrade to buy from hold by Stifel. The firm said the company has “plenty of room for growth” outside of the U.S. market.

Walgreens Boots Alliance — Shares popped 5.4% on Monday after JPMorgan upgraded shares to overweight from neutral and raised its price target. The firm said it believes Walgreens can remove several overhangs in the coming quarters and improve its performance.

The full list can be found here.

— Hakyung Kim

The United Auto Workers union announced Monday that it is expanding its strike to include a Stellantis plant in Michigan that produces full-sized Ram pickup trucks.

The expansion adds about 6,800 workers to the strike. The additional factory is part of a larger move by the union against the Big 3 of Chrysler-parent Stellantis, Ford and GM. The strike has now been ongoing for more than a month.

The U.S.-traded shares of Stellantis were up less than 1% on Monday. Shares of Ford and GM were both down slightly for the session.

— Jesse Pound

Oil giant Chevron was the biggest laggard in the Dow Jones Industrial Average, falling 2.6% after announcing plans to buy Hess for $53 billion, or $171 a share.

Salesforce, Amgen and McDonald’s were among the other major underperformers in the 30-stock index, falling more than 1% each.

— Samantha Subin

Tesla shares fell nearly 2% after a new filing revealed that the electric vehicle company’s capital expenditures for the year will surpass the $9 billion previously outlined as it expands its plants.

The company also said in regulatory filings that the U.S. Department of Justice has asked for documents and information pertaining to its driver assistance system Autopilot, among other features.

— Samantha Subin

Pershing Square’s Bill Ackman said he’s covered his short position in long-term Treasurys out of concern that heightened geopolitical risk could drive investors to safe-haven assets, pushing up bond prices.

“There is too much risk in the world to remain short bonds at current long-term rates,” Ackman said in a post on X, formerly known as Twitter, on Monday.

Ackman, who is a billionaire hedge fund manager, first revealed he was bearish on the 30-year Treasury note in August. He has been a vocal supporter of Israel in its conflict with Hamas, posting frequently about the war.

— Alex Harring, Yun Li

A boost in sentiment could drive near-term upside for Iridium, according to Deutsche Bank.

The bank listed the communications stock on Monday as one of its catalyst call ideas, meaning it has high conviction that the stock will outperform over the next two weeks to three months. Analyst Edison Yu’s $53 price target implies a roughly 38% upside from the stock’s closing price of $38.48 on Friday afternoon.

Shares of Iridium were down 1% after the market open.

The company reported its third-quarter earnings last Thursday, coming in below analyst estimates. Iridium reported $0.01 earnings per share on $197.6 million in revenue, as opposed to the $0.04 earnings per share on $200.1 million estimated by analysts polled by FactSet.

“In our view, the main catalyst is Qualcomm hosting its annual Snapdragon Summit (Oct 24) where it could provide updates on the satellite feature roadmap and timeline,” Yu wrote. “Following material weakness in the stock (-20% last month vs. NASDAQ -1%), we see potential for sentiment to improve this week as new details about Iridium’s direct-to-device (D2D) efforts could be announced.”

— Lisa Kailai Han

Auto insurer Geico, owned by Warren Buffett’s Berkshire Hathaway, has cut 2,000 jobs or 6% of its workforce amid increasing pressure from rising costs.

“Levels of inflation that we haven’t seen in decades, delays in parts or labor shortages extending time to repair, rising medical costs, and other factors have caused our loss costs and combined ratio to increase, alongside the entire industry,” Geico CEO Todd Combs said in an internal memo Friday.

Geico, the crown jewel of Berkshire’s insurance empire and Buffett’s “favorite child,” found itself in a bit of a trouble in recent years after losing market share to its best competitor, Progressive. Geico was late to implement and improve the use of telematics, which allow insurers to collect clients’ driving data, including their mileage and speed, to help price policies.

— Yun Li

Morgan Stanley’s Mike Wilson expects more choppiness ahead for stocks into year end.

The strategist said stocks could move lower this week and breach its early October lows. While a pullback could be a springboard for a bounce, Wilson expects the S&P 500 will end the year around 3,900. That’s about 7% below where the index closed Friday at around 4,224.

“Based on our views on earnings, valuations and policy (both monetary and fiscal), we believe the S&P 500 will have a hard time getting back above what were previously levels of support (i.e., 4300-4400) tactically,” Wilson wrote Monday.

“Based on our fundamental and technical analysis, we remain comfortable with our 3900 year-end target,” Wilson added.

— Sarah Min

There are a few main reasons for the market’s continued pressure on Monday morning, according to Adam Crisafulli.

“The macro mood is picking up right where it left off on Friday as sentiment wilts under the weight of four key sources of negativity,” Crisafulli wrote in his morning note. Those sources: elevated rates, geopolitical tensions, federal government “dysfunction” and “underwhelming” earnings.

All three of the major U.S. stock indexes finished lower on Friday, with the Dow ending down nearly 300 points. Friday also marked the end of a losing week for the three indexes.

— Alex Harring

Bitcoin began the Monday trading day above the key resistance level of $30,000, extending gains from the previous week — its best week since June — helped by optimism around the likelihood the market will soon get its first spot bitcoin ETF as well as a flight to safety.

At 8 a.m. ET the flagship cryptocurrency traded 2.63% higher at $30,670.90, according to Coin Metrics. Ether, crypto’s other “blue chip” asset that has had a higher correlation with bitcoin recently, was up 2.5% at $1,677.44.

It has reached $30,000 at several points in 2023 but has struggled to make a sustained move higher. Investors are expecting the approval of a bitcoin ETF to change that between the end of the year and the first half of 2024.

— Tanaya Macheel

This week marks the busiest flurry of earnings results for the third-quarter, according to Bank of America.

BofA’s head of U.S. equity and quantitative strategy Savita Subramanian wrote in a Sunday note that roughly 40% of S&P 500 companies set to report results this week. Third-quarter earnings season has so far surpassed the previous quarter in terms of top-line beats but is lagging in forward guidance, she added.

With about 24% of S&P 500 company results already in, roughly 5% have surpassed analyst earnings estimates. That’s down from 9% the week prior.

“Cuts to outlook could be offset by better results and outlook at cyclicals benefitting from resilient manufacturing and consumption,” Subramanian said.

— Brian Evans

This week starts off with the S&P 500 below a key technical that could signal further downside for stocks.

On Friday, the S&P 500 closed below its 200-day moving average for the first time March 17.

The index had tested and bounced off the 200-day level earlier this month, but the rally proved to be weak and the bounce reversed.

The Nasdaq Composite is still above its 200-day, but it is 10% below its 52-week high.

— Jesse Pound, Gina Francolla

These are some of the stocks moving premarket:

• Chevron, Hess — Chevron shares slumped more than 2% after the oil giant said its buying smaller rival Hess in an all-stock deal totaling $53 billion, or $171 a share.
• Apple — Apple shares fell 1.5% following a report from the Global Times that Foxconn, a major supplier for the tech giant is facing a tax and land-use related investigation in China.
• Walgreens Boots Alliance — The pharmacy operator rose nearly 3% after JPMorgan upgraded Walgreens Boots Alliance shares to overweight from neutral.

Read the full list of stocks on the move here.

— Samantha Subin

Chevron agreed to buy rival Hess for $53 billion in an all-stock deal, the companies announced Monday. Hess shares rose more than 1% in the premarket. Chevron’s stock dipped 3%.

The deal, which values Hess at $171 per share, is expected to close in the first half of next year.

“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” Chevron CEO Mike Wirth said. 

— Fred Imbert

European markets opened mixed Monday as investors continue to monitor economic and geopolitical uncertainty, and look ahead to a busy week for earnings and the European Central Bank’s latest monetary policy decision.

The pan-European Stoxx 600 index was flat at market open, with sectors spread across tentatively positive and negative territory. Retail stocks made the biggest gains with a 0.6% uptick, while oil and gas dropped 1%.

— Hannah Ward-Glenton

Mainland Chinese markets fell to start the week, with the benchmark CSI 300 index diving below its one-year low on Monday and hitting its lowest level since February 2019.

The index, which tracks the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, fell 0.81% to 3,482.28 after three straight days of losses, below the 3,508.7 recorded on Oct. 31, 2022.

The next level to watch would be 3,442.7, which it last hit on Feb. 21, 2019, according to data from LSEG.

— Lim Hui Jie

Shares of chipmaker and major Apple supplier Foxconn — also known as Hon Hai — fell about 3% after Chinese state media announced authorities conducted inspections on subsidiaries in various provinces on the mainland.

The Global Times, citing unnamed sources, said multiple offices of Hon Hai’s subsidiaries across China had been subjected to tax audits and on-site investigations into land use. The report did not elaborate on the investigations.

Foxconn, which trades as Hon Hai Precision Industry in Taiwan, said in a statement that “We will actively cooperate with the relevant units on the related work and operations.”

Read the full story here

— Lim Hui Jie, Sheila Chiang

Investors are gearing up for the busiest week of earnings season, with 30% of companies in the S&P 500 slated to report.

Tech titans Alphabet and Microsoft are slated to release earnings after the bell on Tuesday. Meta is due to report on Wednesday, and Amazon on Thursday.

Three key industrial companies are also reporting, starting with 3M and General Electric on Tuesday. Boeing is set to follow on Wednesday before the bell.

With General Motors reporting on Tuesday and Ford on Thursday, investors will also gauge the economic impact of the United Auto Worker strikes.

— Lisa Kailai Han, Robert Hum

Stock markets in the Gulf declined on Sunday amid concerns about an escalation in the Israel-Hamas war and additional interest rate hikes from the U.S. Federal Reserve.

• Saudi Arabia’s benchmark index was down for a third consecutive session, ending 1.5% lower, as of October 22. Al Rajhi Bank, a Saudi Arabian bank which is the world’s largest Islamic bank by capital, lost 2.1%.
• The Qatari index continued its five-day streak of losses, ending 0.9% lower, with Industries Qatar dropping 2.2% and Qatar Navigation sliding 3%. The Qatar National Bank declined by 2.1%.
• The Dubai Financial Market General Index, Dubai’s main share index, retreated 1.5%.
• Outside the Gulf, Egypt’s blue-chip index gained 2.4%.

Monetary policy in the Gulf Cooperation Council is usually guided by the Federal Reserve’s policies as most regional currencies are pegged to the U.S. dollar. The Gulf Cooperation Council, or GCC, has six members: Qatar, Bahrain, Oman, Kuwait, Saudi Arabia and the United Arab Emirates.

— Pia Singh