Dow Jones secures longest win streak since late July following best week of 2023

U.S. stocks finished higher on Monday, handing the Dow its longest win streak since late July, following the best week for equities in 2023.

How stocks traded

  • The Dow Jones Industrial Average
    finished up by 34.54 points, or 0.1%, at 34,095.86.

  • The S&P 500
    closed higher by 7.64 points, or 0.2%, at 4,365.98.

  • The Nasdaq Composite
    ended up by 40.50 points, or 0.3%, at 13,518.78.

  • Monday was the Nasdaq’s seventh straight day of gains, matching the win streak last seen in January. It also marked the sixth consecutive session of advances for the Dow Jones and the S&P 500, the longest streak of gains since June-July.

Last week, the Dow Jones rallied 5.1%, its biggest weekly gain since the week that ended on Oct. 28, 2022. The S&P 500 jumped 5.9% and the Nasdaq Composite gained 6.6% — the largest weekly advances since Nov. 11, 2022.

What drove markets

Stocks found fresh momentum late Monday, adding to the sharp climb from last week that occurred after comments from Federal Reserve Chair Jerome Powell and signs of a cooling labor market had forced bond yields sharply lower. Expectations also have been growing that the U.S. central bank might be finished raising interest rates in this cycle.

Yields on the benchmark 10-year U.S. Treasury bond
jumped back to 4.662% on Monday, constraining equity bulls’ optimism during much of the New York session. A few weeks ago, the benchmark rate had traded at a fresh 16-year high above 5%, but then it briefly dipped below 4.5% on Friday — which helped fuel last week’s risk-taking appetite. Investors are awaiting a series of bond auctions later this week.

Over much of Monday’s session, equities were “playing second fiddle” to Treasury bonds, “with the S&P 500 merely tagging along for the ride,” said Stephen Innes, managing partner at SPI Asset Management.

That was the case until late in the day, when stocks finally found renewed upward momentum.

The moves in stocks have been occurring against a backdrop of lingering negative investor sentiment. A survey conducted by the American Association of Individual Investors showed that 50.3% of respondents were in a bearish mood during the week that ended last Wednesday.

“If you think about the reason why yields have softened prior to today, it’s because of a potential economic slowdown. On one side, people are hoping for a seasonal rally, and on the other are signs that the economy is slowing. That’s what you’re seeing playing out right now,” Mark Neuman, founder of Atlanta-based Constrained Capital, said via phone on Monday.

Check out: Will a stock-market rally follow a peak in bond yields? It depends.

It’s a slow start to the week in terms of economic data, featuring just the Federal Reserve’s loan-officer survey for October, which showed that banks continued to tighten standards for business loans in the third quarter.

Fed governor Lisa Cook was the only senior Fed official to deliver public remarks on Monday, pushing back against concerns that households and businesses with too much debt could threaten the economy.

Moreover, “in the banking industry, the deposit volatility that we saw earlier this year has abated,” Cook said.

See: Fed’s Cook says debt not a big threat yet to U.S. economy

Meanwhile, the third-quarter earnings season continues, but reports are coming in at a slower pace. Vertex Pharmaceuticals

will release results after Monday’s closing bell. Highlights for the week may be Uber

on Tuesday and Walt Disney

on Wednesday.

See: Disney and other entertainment giants report after upbeat results from peers, but investors are getting harsher on companies that don’t deliver

With 81% of S&P 500 companies having reported results, 82% of those have delivered a positive earnings-per-share surprise and 62% have posted a positive revenue surprise, according to John Butters, senior earnings analyst at FactSet. However, stocks’ reaction has been mixed, likely due to a high bar for forward guidance, as Barron’s reported.

Need to Know: Rally will fizzle out in a week or two, Morgan Stanley strategist Wilson says

Companies in focus

  • Tesla Inc. shares

    finished down by 0.3% following Elon Musk’s reported announcement to staff that the automobile manufacturer will make its new low-cost cars in a plant near Berlin.

  • Shares of Kodiak Sciences Inc.

    ended down by 13.6% after the biotech company outlined plans to launch an additional pivotal study looking at the effectiveness of its tarcocimab tedromer drug following talks with U.S. regulators.

  • Paramount Global’s Class B shares

    closed down by 7.8% after analysts at BofA Securities downgraded the stock.

  • Bumble’s Class A stock

    finished 4.4% lower after the company, which operates the dating app Bumble, said that CEO Whitney Wolfe Herd was stepping down and would be replaced by Lidiane Jones.

Jamie Chisholm contributed.

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