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The S&P 500 Index is down by 0.34%, the Dow Jones Industrials Index by 0.51%, and the Nasdaq 100 Index by 0.26% as of today. A rise in bond yields, specifically the 10-year Treasury note yield reaching a 2.5-month high of 4.156%, is contributing to the moderate losses in the stock market. This week, about 20% of S&P 500 companies, including Tesla, Boeing, and Coca-Cola, are set to report Q3 earnings, with expected average earnings growth now projected at +4.3% down from +7.9% growth in July.
In economic indicators, US leading economic indicators fell by 0.5% month-over-month in September, missing expectations of a 0.3% decline. Meanwhile, Chinese banks took action today, lowering benchmark lending rates by more than expected, with the one-year loan prime rate cut to 3.10% from 3.35% and the five-year rate cut to 3.60% from 3.85%. Overall, European markets are mixed, with the Euro Stoxx 50 down 0.61%, while China’s Shanghai Composite rose by 0.20%.
Dallas Fed President Logan indicated a possible strategy of gradually lowering policy rates if economic conditions evolve as anticipated. The markets are currently pricing in a 92% chance of a 25 basis point rate cut at the upcoming FOMC meeting on November 6-7, while the chance of a 50 basis point cut remains at 0%.
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