Stocks Subdued Ahead of This Week’s Start of Earnings Season…..

U.S. stocks gave back some of last week’s rebound, with conviction seemingly hamstrung ahead of this week’s unofficial start to Q3 earnings season. Results will first pour in from the heavyweights in the Financials sector and come amid the likelihood that peak growth rates may have been registered in Q2. Crude oil prices continued to climb amid the festering supply imbalance and as the Delta variant appeared to continue to ease. The Treasury yield curve has steepened as of late but yields were unchanged today as the bond markets were closed for Columbus Day. The economic calendar was dormant today and the equity front was also quiet, though Southwest Airlines canceled nearly 2,000 flights over the weekend, while Emerson Electric agreed to merge two of its software businesses with Aspen Technology for about $11.0 billion. The U.S. dollar ticked higher and remained near highs not seen since last fall, while gold dipped. Europe finished mixed to begin the week and Asia moved mostly higher.

The Dow Jones Industrial Average declined 250 points (0.7%) to 34,496, the S&P 500 Index decreased 30 points (0.7%) to 4,361, and the Nasdaq Composite lost 93 points (0.6%) to 14,486. In moderate volume, 702 million shares were traded on the NYSE and 3.5 billion shares changed hands on the Nasdaq. WTI crude oil rose $1.17 to $80.52 per barrel. Elsewhere, the gold spot price declined $2.30 to $1,755.10 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—advanced 0.3% to 94.34.

The U.S. bond markets were closed today in observance of Columbus Day, the yield on the 2-year note remained at 0.31%, the yield on the 10-year note sits at 1.61%, and the 30-year bond rate is at 2.16%.

Treasuries have seen pressure and the yield curve has steepened as the markets grappled with expectations that the Fed is set to begin to rein in its extraordinary measures put in place to combat the impact of the pandemic, against the backdrop of persisting inflation pressures.

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