U.S. stocks advanced on Monday as gains in major technology companies supported Wall Street, while Treasury yields remained near multi-year highs, the dollar strengthened against the euro, and oil prices declined.
Major technology companies including Nvidia, Meta Platforms, and Microsoft helped drive gains across U.S. indexes. The Dow Jones Industrial Average rose 0.18%, the S&P 500 gained about 0.7%, and the Nasdaq Composite increased about 1%, reaching a new record high.
European markets also ended higher, although French stocks declined to a six-month low due to concerns over government finances. Schneider Electric shares fell after the company announced its acquisition of U.S. software firm PTC.
The pan-European STOXX 600 climbed 0.4% after reaching a four-month low the previous week as global bond yields increased due to inflation concerns, higher corporate debt issuance, and worsening fiscal outlooks.
Latin American markets also moved higher, led by gains in Brazilian stocks and the real currency after right-wing Senator Flavio Bolsonaro exceeded expectations in the first round of the presidential election and advanced to a runoff against incumbent Luiz Inacio Lula da Silva.
MSCI’s global stock index increased 0.7%.
“Relative equity market calm amid the bond market’s perfect storm is understandable, given accelerating economic growth and the AI boom’s rate insensitivity,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
Shalett said investors are monitoring three key areas for potential signs of market stress: earnings revisions, high-yield bond spreads, and U.S. dollar strength alongside currency volatility.
France Pressures the Euro
The euro recovered slightly to trade at $1.122 after falling as much as 0.8% to a 17-month low of $1.1160.
The currency has faced pressure as investors remain concerned about France’s rising debt levels and political uncertainty ahead of next year’s presidential election.
The premium investors demand to hold French 10-year government bonds compared with safer German debt exceeded 150 basis points on Friday, increasing concerns about potential contagion across European markets.
“France is the real deal in terms of risk premia for the euro,” said Saxo strategist Neil Wilson, noting that French deficit reduction plans still face parliamentary challenges.
French 10-year bond yields remained below Friday’s peak of 4.993%, while German yields were largely unchanged.
The weaker euro provided additional support for the dollar, which also benefited from elevated Treasury yields. The dollar index rose 0.2%.
BlackRock Investment Institute strategists said the dollar’s resilience suggests it may be too early to dismiss its long-term strength, although they noted that markets are pricing in more Federal Reserve tightening than they expect, limiting the potential for a sustained dollar rally.
The benchmark 10-year U.S. Treasury yield increased 3.4 basis points to 5.31%. Borrowing costs across major economies remain elevated as concerns over public finances, government debt issuance, and energy prices continue to weigh on bond markets.
Markets Reprice Federal Reserve Expectations
Recent data showed U.S. job growth slowed more than expected in September, while payroll figures from previous months were revised lower. The weaker labor market data caused investors to largely remove expectations for a Federal Reserve rate increase this month.
Japan’s Nikkei gained 2.4%, while MSCI’s broad Asia-Pacific index excluding Japan advanced 1.3%.
According to CME FedWatch data, investors now see roughly a 24% chance of a Federal Reserve rate increase this month, down from 64% a week earlier. However, a December rate move remains largely priced into markets.
Oil prices declined after Middle East crude exports increased and G7 countries pledged to strengthen supplies, although concerns over disruptions linked to the U.S.-Israel conflict with Iran limited losses.
Brent crude futures fell $1.93, or 1.89%, to settle at $100.32 per barrel. U.S. West Texas Intermediate crude declined $1.68, or 1.84%, to close at $89.43.
Spot gold remained stable at $4,143 per ounce.
