Dow retakes perch at 35,000 as bank stocks rise, but Nasdaq Composite sinks 1% as Treasury yields rally

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MARKET SNAPSHOT

U.S. stock indexes traded mixed early Monday, with tech-related shares under heavy selling pressure, while the Dow industrials rose over 200 points as bank shares soared, led by gains for Goldman Sachs Group Inc.

What are major indexes doing?

  • The Dow Jones Industrial Average traded up 227 points, or 0.6%, at 35,012.
  • The S&P 500 index was down 10 points, or 0.2%, to around 4,447.
  • The Nasdaq Composite Index retreated 1%, or 150 points, to reach 14,895.

On Friday, the Dow rose 33 points, or 0.1%, to 34798, the S&P 500 increased 7 points, or 0.15%, to 4455, while the Nasdaq dropped 5 points, or 0.03%, to 15048.

What’s driving markets?

A move in yields was serving as the main catalyst for stocks early Monday, with a renewed selloff for the benchmark 10-year Treasury pushing its rate back above 1.5% for the first time since June 29, according to FactSet. Yields and prices move in opposite directions.

Rising yields can be a headwind for tech-related stocks and other equities more sensitive to interest rates, while helping to boost shares of financials whose business models benefit from higher longer-end rates. Goldman Sachs shares advanced 2.1%, while the Financial Select Sector SPDR ETF rose 1.5%.

Meanwhile, an energy crisis sweeping the globe was also in focus on Monday. Power shortages led to forced factory production cuts in China, while in the U.K., a shortage of truck drivers led to hoarding and declining inventories at gas stations.

Analysts at Goldman Sachs hiked their oil-price forecast to $90 a barrel, citing the impact of what it said was the most bullish hurricane in U.S. history on supply. The Energy Select Sector SPDR ETF jumped 3.6% as oil prices continued to press higher.

Energy disruptions, meanwhile, highlight what’s been a growing issue for the global economy, namely that supply hasn’t recovered as fast as demand in a variety of markets. Costco Wholesale last week said it imposed limits on purchases of toilet paper and water.

Orders for durable goods surged 1.8% in August largely thanks to more demand for Boeing jetliners, but ongoing supply shortages held back auto makers and remained a drag on the U.S. economic recovery. Economists surveyed by The Wall Street Journal had forecast a 0.6% rise.

Investors continued to cast a wary eye on the impact of China Evergrande’s debt troubles on the world’s second-largest economy, while elections in Germany, the No. 1 European economy, have so far failed to produce a decisive result in what’s expected to be months of coalition talks.

There are a number of Federal Reserve officials due to speak this week. Chicago Fed President Charles Evans, in a speech Monday morning, said he was more worried that the economy wouldn’t produce enough inflation rather than run too hot. New York Fed President John Williams and Fed Gov. Lael Brainard were also due to speak Monday.

“The lack of a clear winner in Germany’s election combined with a new batch of speeches from most central bankers may slow the rally down,” said Pierre Veyret, technical analyst at ActivTrades, in a note. “In addition, investors’ eyes are cautiously monitoring the situation in China where both the energy and liquidity crises are worsening, increasing worries of a knock-on impact on other economies.”

Which companies are in focus?

  • Swedish electric car maker Polestar Performance AB said Monday it would go public via a merger with special purpose acquisition company Gores Guggenheim Inc.  in a deal with an implied enterprise value of about $20 billion. Shares of Gores Guggenheim rose 2.5%.
  • In a Monday blog post, Facebook Inc. that it was putting a “pause” on efforts to create a version of Instagram for children under 13. Shares were down 0.9%.

How are other assets faring?

  • The yield on the 10-year Treasury note TMUBMUSD10Y rose to around 1.483% Monday from 1.459% on Friday.
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of rivals, was up 0.1% at 93.43.
  • Oil futures climbed, with the U.S. benchmark CL00 trading 1.7% higher at $75.66 a barrel. Gold futures GC00 added 0.3% to around $1,757.60 an ounce.
  • In Asia, Hong Kong’s Hang Seng Index HSI rose less than 0.1%, while China’s CSI 300 index 000300 climbed 0.6%. The Nikkei 225 index NIK closed marginally lower.
  • In Europe, the Stoxx Europe 600 SXXP, traded down less than 0.1%, while the FTSE 100 index UKX was trading closed 0.2% higher.
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