Caterpillar shares tumble 5.75%; Micron and select large-cap tech shares buck the trend. FOMC minutes signal potential for further rate hikes this year, contingent on incoming economic data.
Wall Street closed lower on Monday as investors grappled with rising Treasury yields and a sell-off in the industrial sector. The Dow Jones Industrial Average bore the brunt of the decline, hampered by significant losses in heavy hitters such as Caterpillar, while gains in tech giants like Amazon and Apple helped temper losses for the broader indices.
The Dow Jones Industrial Average dropped 341.41 points (0.66%) to settle at 51,179.87. The S&P 500 index retreated 17.16 points (0.22%) to 7,801.77, and the Nasdaq Composite fell 61.20 points (0.22%) to 27,538.69. Both the S&P 500 and the Nasdaq pulled back from the record-high closing levels they notched in the previous session.
The market faced early headwinds as U.S. long-term Treasury yields spiked, weighing on investor sentiment. Driven by concerns over inflation and rising fiscal deficits, the 10-year Treasury yield climbed to an intraday high of 5.36%. However, yields pared gains to settle around 5.28% in late trading following a solid reception for a $39 billion 10-year note auction. Major indices also managed to trim their losses from their intraday lows.
Regarding monetary policy, the prospect of additional rate hikes before year-end remains firmly on the table. The minutes from the September 15-16 Federal Open Market Committee (FOMC) meeting, released today, revealed that most participants deemed further tightening appropriate by the end of the year. The committee underscored that future decisions will remain data-dependent, contingent on incoming economic indicators, updated forecasts, and the evolution of risk factors. It is important to note that these views reflected the consensus at the time of the September meeting and do not constitute a commitment to an October rate hike.
Sector-wise, the weakness was concentrated in industrials. Caterpillar fell 5.75%, Deere retreated 3.80%, and GE Aerospace dipped 1.86%. GE Vernova and Eaton also saw declines of 3.12% and 3.09%, respectively, reflecting broad-based pressure across machinery, aerospace, and power equipment stocks.
Semiconductor stocks also struggled, with the Philadelphia Semiconductor Index sliding 151.67 points (1.15%) to close at 13,066.15. NVIDIA fell 0.74%, AMD declined 0.55%, and both Texas Instruments and Qualcomm lost 2.78% and 2.16%, respectively.
In contrast, Micron Technology outperformed within the chip sector, rising 4.06%. Intel and Broadcom also managed to stay in positive territory, gaining 0.55% and 0.19%, respectively.
Among large-cap technology stocks, Amazon gained 1.42%, Apple rose 0.91%, and Alphabet climbed 0.81%. Microsoft edged up 0.09%. However, trading was mixed, with Meta falling 2.38% and Tesla dropping 0.75%.
Pharmaceuticals showed relative strength, with Eli Lilly advancing 2.70%, Amgen rising 2.60%, AbbVie gaining 1.75%, and Johnson & Johnson climbing 1.44%. As major indices closed in the red, the market was characterized by a tug-of-war between industrial weakness and resilience in pharmaceuticals and select technology names.
