Treasury Yields and Retail Sales Data Impact Dow, Bank of America, Johnson & Johnson, Lockheed Martin, and Nvidia Stocks
Dow’s Upside Momentum Stifled by Rising Treasury Yields
The Dow managed to eke out a gain on Tuesday, but its upside momentum was stifled due to a jump in Treasury yields. The increase in yields followed stronger-than-expected retail sales data, which highlighted the ongoing strength in the economy. This, in turn, sparked fresh fears about another Federal Reserve rate hike before the end of the year.
The Dow rose by 0.04% or 13 points, while the S&P 500 fell by 0.3% and the Nasdaq Composite fell by 0.01%.
Treasury Yields Surge as Retail Sales Exceed Estimates
Treasury yields continued their surge higher, with the yield on the 2-year treasury rising to a 17-year high. This surge was driven by better-than-expected retail sales data, which pointed to ongoing economic strength and suggested that the Federal Reserve still has more work to do.
Retail sales rose significantly, surpassing economists’ forecasts of a 0.3% rise. The retail sales control group, which has a larger impact on U.S. GDP, also exceeded expectations with a well-above-forecasted 0.1% rise.
As a result, the odds of a December rate hike by the Federal Reserve have increased from 26% the prior week to 42%, according to Investing.com’s data.
Bank of America Impresses, Goldman Sachs Falters
Bank of America Corp reported quarterly results that impressed Wall Street, sending its shares more than 2% higher. On the other hand, Goldman Sachs’ Q3 earnings fell short due to losses from its real investment and Greensky fintech business.
Goldman Sachs suffered a $358 million write-down on its real estate investment, as the sector has come under pressure from a sharp surge in interest rates.
Johnson & Johnson and Lockheed Martin Deliver Strong Earnings
Johnson & Johnson upgraded its annual guidance on performance after reporting earnings that beat expectations on both the top and bottom lines. However, the pharmaceutical company’s stock closed about 1% lower.
Lockheed Martin’s third-quarter results met expectations, but concerns about the impact of delivery delays for its F-35 jets weighed on the defense company’s stock.
Nvidia Leads Chip Sector Lower Amidst Export Restrictions to China
NVIDIA Corporation fell more than 4% and led the broader chip sector lower following a Bloomberg report that the U.S. is restricting the sale of semiconductors designed by the chipmaker for the Chinese market.
The expanded restrictions now include Nvidia’s A800 and H800 chips, the lower-performance GPUs that Nvidia developed after the initial U.S. exports in October last year.
These tighter restrictions come as the U.S. aims to curb loopholes that allowed Chinese firms to evade export controls introduced last year by routing chip shipments through other nations.
Despite the expanded export restrictions, Nvidia does not expect a significant impact on its financial results in the near term.
Overall, the movement of Treasury yields and the strong retail sales data had a significant impact on the Dow, as well as on individual stocks like Bank of America, Johnson & Johnson, Lockheed Martin, and Nvidia. Investors will closely monitor these developments as they navigate the current market conditions.
