U.S. stocks close mixed to kick off the week

NEW YORK, Oct. 21 (Xinhua) — U.S. stocks ended mixed on Monday, as U.S. Treasury yields rose sharply and investors awaited new earnings reports this week.

The Dow Jones Industrial Average fell by 344.31 points, or 0.80 percent, to 42,931.6. The S&P 500 sank 10.69 points, or 0.18 percent, to 5,853.98. The Nasdaq Composite Index increased by 50.45 points, or 0.27 percent, to 18,540.01.

Ten of the 11 primary S&P 500 sectors ended in red, with real estate and health leading the laggards by losing 2.08 percent and 1.19 percent, respectively. Meanwhile, technology bucked the trend by rising 0.93 percent.

The yield on the 10-year U.S. Treasury jumped 12.4 basis points to 4.206 percent on Monday.

“Bond yields continue to back up, which implies to me that investors are now thinking that the Fed will be slower to lower interest rates because the economy remains resilient,” CFRA chief investment strategist Sam Stovall said. “As a result, the Fed will likely have a harder time pushing the inflation rate down to its target 2 percent level in the next year or so.”

Earnings reports will take center stage this week, with about one-fifth of the S&P 500 companies set to release their results. Key companies to watch include Tesla, Coca-Cola, and GE Aerospace, all of which are expected to provide insights into their respective industries and offer clues about broader market trends.

So far, an emerging trend in quarterly earnings reports shows that companies beating Wall Street expectations on both revenues and earnings are seeing more significant stock moves than those missing on both metrics.

According to Bank of America, through earnings from 71 companies in the S&P 500, those outperforming on both counts are experiencing an average stock gain of 3.15 percent the following day, significantly higher than the 1.49 percent average since 2000.

Meanwhile, companies missing expectations are seeing an average decline of 2.61 percent, slightly below the 2.44 percent historical average. This is the first time since 2020 that such a dynamic has occurred.

“As large-cap Tech earnings near, the potential for large earnings reactions to continue strengthens the case for owning Tech volatility through the end of October,” Bank of America Securities team of strategists wrote in a note on Monday morning.