Wall Street rises as 10-year Treasury yield retreats below 5%

By Shubham Batra and Shashwat Chauhan

(Reuters) -U.S. stocks reversed course to rise on Monday as bond yields pulled back after hitting the crucial 5% mark earlier in the session, while investors awaited earnings from the world’s largest technology companies and key economic data.

The benchmark bounced above 4200, a key technical level, after falling almost a percent during the open.

The yield on the 10-year note touched the July 2007 milestone that it briefly attempted to scale last week, but retreated to 4.8629%, down 6 basis points.

Bill Ackman’s hedge fund Pershing Square Capital Management has covered its bond short position, the billionaire investor posted on messaging platform X, saying it was too risky to remain short on bonds at current long-term rates.

Focus continues to be on the positive earnings season. Microsoft (NASDAQ:), Alphabet (NASDAQ:), Amazon.com (NASDAQ:) and Meta Platforms (NASDAQ:) , which have helped power the S&P 500 higher in 2023 while the other indexes lagged, report later this week.

“No matter what results we see from big tech earnings this week, the results won’t justify their outlandish valuations,” said David Bahnsen, chief investment officer at The Bahnsen Group.

“Even with the declines in big tech stock prices over the past three months, they are still too expensive.”

Chipmaker Intel (NASDAQ:), oil major Exxon Mobil (NYSE:), General Motors (NYSE:) are among other major companies set to report results this week.

Overall, earnings are expected to grow at 1.2% in the third quarter for S&P 500 companies, as per LSEG data.

Investors also kept tabs on tensions in the Middle East after Israel bombarded Gaza and also struck southern Lebanon overnight, in signs that the conflict was spreading.

U.S. GDP print, expected on Thursday, will be closely monitored amid expectations that the economy expanded at a robust 4.2% in the third quarter, which might warrant tighter monetary policy.

Investors will also track the personal consumption expenditure (PCE) price index – the Fed’s preferred inflation gauge – for September at the end of this week.

At 11:51 a.m. ET, the was up 4.10 points, or 0.01%, at 33,131.38, the S&P 500 was up 12.43 points, or 0.29%, at 4,236.59, and the was up 69.09 points, or 0.53%, at 13,052.90.

Seven of the 11 major S&P 500 sub sectors were in the green, with industrials and communication services leading gains.

Salesforce (NYSE:) dipped 1.2% as Piper Sandler downgraded to “neutral” from “overweight”, while pharmacy chain operator Walgreens Boots Alliance (NASDAQ:) added 4.9% after J.P. Morgan upgraded it to “overweight”.

Chevron (NYSE:) fell 2.6% after the energy major said it would buy smaller rival Hess Corp (NYSE:) in a $53 billion all-stock deal. Hess was down 0.4%.

FMC (NYSE:) shed 12.4% after the agricultural products supplier lowered its third-quarter revenue and earnings outlook.

Declining issues outnumbered advancers for a 1.06-to-1 ratio on the NYSE and for a 1.08-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 51 new lows, while the Nasdaq recorded 10 new highs and 369 new lows.