Market Summary: Spike in US Yields as Tech Stocks Decline and Retail Sales Surge

US bond markets reacted sharply on Monday, with yields soaring in response to robust retail sales data, igniting speculation that the Federal Reserve might delay interest rate cuts. This sentiment was exacerbated by preparations for an upcoming surge in bank debt offerings.

Treasury yields reached new highs for 2024, notably affecting tech stocks sensitive to rate changes. The S&P 500 pared down an earlier gain close to 1%. In the commodities market, West Texas Intermediate oil was trading under $85 a barrel, slightly recovering following a report by Axios on Israel’s potential military response to Iran.

In the equity markets, Tesla Inc. and Apple Inc. saw significant declines among tech megacaps, whereas financial stocks performed better, buoyed by an unexpected profit surge reported by Goldman Sachs Group Inc. Specifically, Treasury yields on 10-year notes jumped by 10 basis points to 4.62%, and two-year note yields neared 5%.

Corporate Highlights:

  • Salesforce Inc.’s (CRM) CEO Marc Benioff is reportedly negotiating a major acquisition of Informatica Inc., having recently defended his acquisition strategy against activist investors.
  • Tesla Inc. (TSLA) plans to reduce its workforce globally by more than 10%, as communicated by CEO Elon Musk, amid decreasing demand for electric vehicles.
  • The American Airlines Group Inc. (AAL) pilots’ union has alerted its members about a significant rise in safety and maintenance issues.
  • Clearlake Capital Group LP has increased its offer to purchase Blackbaud Inc. at $80 per share, following a previously rejected proposal.
  • Charles Schwab Corp. (SCHW) reported first-quarter net revenue that exceeded expectations, as the brokerage firm recovers from a challenging 2023.
  • Apple Inc. (AAPL) experienced a sharper than expected drop in iPhone shipments, nearly 10% for the quarter ending in March, with China’s weak market impacting overall performance despite a global industry recovery.
  • CVC Capital Partners is moving forward with an IPO in Amsterdam, aiming to raise at least €1.25 billion ($1.3 billion), setting a potential trend for other private equity firms.
  • Deutsche Lufthansa AG (LHA.DE) has downgraded its profit forecast for the year, attributing the lower expectations to financial impacts from recent strikes.

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Market Summary: Spike in US Yields as Tech Stocks Decline and Retail Sales Surge

Editor Prism MarketView