Wall Street closed lower on Monday, pulled down by communication and consumer stocks. Investors continue to wait eagerly for the monetary policy direction the Fed gives at its December meeting. Treasury yields rose, applying pressure on equities. All three benchmark indexes finished in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slid 0.5%, or 215.67 points, to close at 47,739.32. Twenty components of the 30-stock index ended in negative territory, while 10 ended in the positive.
The tech-heavy Nasdaq Composite lost 32.22 points, or 0.1%, to close at 23,545.9.
The S&P 500 fell 23.89 points, or 0.4%, to close at 6,846.51. Ten of the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Materials Select Sector SPDR (XLB) and the Consumer Discretionary Select Sector SPDR (XLY) receded 1.8%, 1.7% and 1.5% respectively, while the Technology Select Sector SPDR (XLK) advanced 0.9%.
The fear gauge CBOE Volatility Index (VIX) increased 8.1% to 16.66. A total of 16.1 billion shares were traded on Monday, lower than the last 20-session average of 17.5 billion. Decliners outnumbered advancers by a 2.04-to-1 ratio on the NYSE and by a 1.28-to-1 ratio on the Nasdaq.
Warner Bros. Takeover Drama Weighs on the Communication Sector
Wall Street’s decline on Monday was largely due to weakness in communication stocks, reflecting a shift in investor sentiment. A key factor behind the slide was the weak performance of Netflix, Inc. NFLX, which tumbled 3.4% in the face of increased M&A drama in the Warner Bros. Discovery, Inc. WBD takeover bid.
Paramount Skydance Corporation PSKY surged 9% after announcing a hostile $108.4 billion all-cash bid for WBD, offering $30 per share, aimed to outbid NFLX’s previous deal. Investors responded to the bold offer by pushing PSKY higher. Meanwhile, Netflix shares dropped, weighed down by the new competition and uncertainty surrounding the takeover race. In addition, broader market anxiety ahead of the upcoming Fed meeting weighed on risk appetite. With markets pricing in a near-certain rate cut, some investors pulled money out of higher-risk or more volatile sectors like Communication Services and rotated toward more stable or growing sectors such as semiconductors and tech infrastructure, benefiting chipmakers. Traders now see about an 89% likelihood of a 25-basis-point rate cut on Wednesday, based on the CME’s FedWatch Tool.
Consequently, shares of Alphabet Inc. GOOGL and Meta Platforms, Inc. META fell 2.3% and 1%, respectively. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Rising Treasury Yields and Japan Quake Jitters Weigh on Wall Street
Higher yields on U.S. Treasury bonds added to the pressure on equities on Monday, especially after a powerful earthquake struck off Japan’s coast. The benchmark U.S. 10-year Treasury yield jumped 4.9 basis points, reaching roughly 4.188%, with an intraday high near 4.19%. This was the benchmark yields’ highest level since late September, and is closely tied to investor jitters over broader global risks and renewed uncertainty ahead of the Fed’s policy decision. As bond yields rose, stock valuations, particularly in risk-sensitive sectors, came under strain.
No economic data was released on Monday.
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Netflix, Inc. (NFLX): Free Stock Analysis Report Warner Bros. Discovery, Inc. (WBD): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis Report Paramount Skydance Corporation (PSKY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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