Stocks finished lower Monday as investors looked to Israel's formal response to an unprecedented missile attack from Iran over the weekend.
The Dow Jones Industrial Average lost 248 points, or 0.65%, to 37,735.10, while the S&P 500 fell 1.20% to 5,061.82, and the Nasdaq slipped 1.8% to 15,885.02.
Retail sales surged again last month, rising 0.9% to a collective total of $709.6 billion, topping Wall Street forecasts and adding further pressure to near-term Fed rate cut bets.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said that “the one constant throughout this entire expansion has been the strong consumer and based on this morning’s Retail Sales numbers, it seems as if that strength is only increasing.”
“The Fed has been promising rate cuts all year long and has skipped a number of opportunities to dial that rhetoric back, so now they are in a position where consumers are spending and the progress on inflation is stalling out at the same time that they are talking about cutting rates.," he said.
Zaccarelli said the markets have been buoyed by strong corporate profits and the elixir of lower rates, "but it seems like those two things are increasingly at odds with each other, so we would exercise some caution in the near term."
Updated at 12:38 PM EDT
Red alert
Stocks are moving lower heading into the afternoon session, with the S&P 500 down 6 points, or 0.11% and the Nasdaq off 64 points, or 0.4%, as investors take a cautious stance on risk amid reports that Israel has finished preparations for a retaliatory strike on Iran
❖ ISRAEL WEIGHS STRIKE ON IRAN TO ‘SEND A MESSAGE’ WHILE PRESERVING ALLIANC:WAPO
— *Walter Bloomberg (@DeItaone) April 15, 2024
Prime Minister Benjamin Netanyahu has asked the Israel Defense Forces to provide target options, according to an official familiar with high-level discussions, who said Israel is looking at…
Updated at 11:32 AM EDT
Safety first
The dollar index is testing the highest levels since early November, rising 0.1% to 106.152 in late-morning trading as investors look for both a safe place to park cash amid the ongoing middle east crisis and the ongoing leap in Treasury bond yields.
The VIX index, was last marked 1.2% higher at $17.52 , the highest since November 1, following Sunday's massive 16%-plus surge.
CBOE Volatility Index $VIX saw its largest 1 day jump since March 9, 2023 pic.twitter.com/MI7Ges0kk9
— Barchart (@Barchart) April 14, 2024
Updated at 10:17 AM EDT
Beware the bonds
Treasury bond yields are moving firmly higher Monday, with 10-year notes topping a fresh five-month high of 4.661%, following both the stronger-than-expected retail sales figures and last week's hot March inflation report.
Benchmark 2-year notes were also on the move, rising just below 5%, a level last reached on November 10 of last year. The paper was last changing hands at 4.995%.
10-year Treasury yields have risen by more than 45bp so far this month. After today's hotter-than-expected retail sales number, traders aren't pricing in a full rate cut until November. pic.twitter.com/xcXcVDT3s2
— Lisa Abramowicz (@lisaabramowicz1) April 15, 2024
Updated at 9:48 AM EDT
Shake it off ...
Stocks are off to a solid start, with the S&P 500 rising 42 points, or 0.81%, with the Dow up 338 points thanks in part to a 5% gain for Goldman Sachs following the bank's better-than-expected first quarter earnings.
The Nasdaq, meanwhile, was marked 100 points, or 0.62% even as Apple fell 0.95% following reports of weaker first quarter iPhone sales.
S&P 500 Opening Bell Heatmap (April 15, 2024)$SPY +0.78% 🟩$QQQ +0.69% 🟩$DJI +1.01% 🟩$IWM +0.50% 🟩 pic.twitter.com/D5Rtqe1VdG
— Wall St Engine (@wallstengine) April 15, 2024
Updated at 8:45 AM EDT
Shop and don't drop
Retail sales surged again last month, rising 0.9% to a collective total of $709.6 billion, topping Wall Street forecasts and adding further pressure to near-term Fed rate cut bets.
The closely-tracked control group number, which feeds into GDP calculations, was marked 1.1% higher and more than triple Street forecasts.
Stocks are holding gains, but Treasury yields are moving higher on the inflationary aspect of the report, with 10-year notes rising 4 basis points to 4.615% and 2-year notes pegged at 4.985%.
Consumer continues to spend: March Retail Sales .7% vs. .4% expectations with prior revised to .9% from .6%. Ex auto retail sales 1.1% vs .5% expectations. And importantly the control group 1.1% vs .4% expectations - as this goes into GDP figures.
— Stephanie Link (@Stephanie_Link) April 15, 2024
Updated at 8:21 AM EDT
Goldman gets deal boost
Goldman Sachs (GS) share are a key early mover, with the Dow component rising 3.8% after posting stronger-than-expected first quarter earnings powered in part by a boost in global M&A activity.
Goldman's markets division saw revenues rise 15% from last year to $9.73 billion, with asset and wealth management revenues up 18% to $3.8 billion.
Related: Goldman Sachs shares leap as merger rebound powers Q1 earnings beat
Stock Market Today
The dollar surged to a fresh five-month high against its global peers Sunday as investors scrambled for safe-haven assets and braced for a week of spiking market volatility amid concern about the prospect of a wider military conflict in the Middle East triggered by Tehran's attack.
Iran said the strike, its first-ever military action that directly targeted Israel's sovereign territory, was launched to retaliate for Israel's April 1 attack on a consular building within the Iranian embassy compound in Syria, which it said killed several high-ranking officials among Iran's Islamic Revolutionary Guards.
Israel, which has not claimed responsibility for the events in Damascus, has vowed to "extract a price from Iran ... when time is right for us" after saying it repelled around 99% of the 300 drones and missiles Tehran launched late Saturday evening.
TIMOTHY A. CLARY/AFP via Getty Images
"We will build a regional coalition and exact the price from Iran in the fashion and timing that is right for us," said Benny Gantz, a retired army general serving in the cabinet of Prime Minister Benjamin Netanyahu.
Iran, meanwhile, has said it will strike back if either the U.S. or Israel retaliates.
“The president has been very clear: We don’t seek escalated tensions in the region. We don’t seek a wider conflict,” White House national security spokesperson John Kirby told ABC's "This Week" program on Sunday. "I think the coming hours and days will tell us a lot.”
Nonetheless, that prospect, which began with Iran-backed Hamas crossing over from Gaza and killing and capturing 1,200 Israeli citizens on October 7, has the potential to rock global financial markets after a week of surging volatility tied to the repricing of Federal Reserve interest-rate-cut forecasts.
The S&P 500 ended 75 points, or 1.46%, lower on Friday, marking its biggest single-day decline since late January and a one-week decline of around 1.55%.
Investors will also navigate a busy week of corporate earnings, with 41 S&P 500 companies set to report over the next five days, as well as key readings on retail sales, housing starts and weekly jobless claims data.
Analysts see first-quarter earnings rising 2.7% from a year earlier to a share-weighted $447.3 billion, with second-quarter profits estimated to improve to $494.7 billion.
The Commerce Department will also publish March retail sales data at 8:30 a.m. U.S. Eastern Time, with economists looking for a modest easing from the $700.7 billion tally.
Early indications suggest markets are, for the moment, looking at a solid Monday open, with futures tied to the S&P 500 indicating a 22-point opening bell gain and those tied to the Dow Jones Industrial Average suggesting a 190 point advance.
The tech-focused Nasdaq, meanwhile, is priced for a 113 point gain despite premarket declines for heavyweights Tesla (TSLA) and Apple (AAPL) .
The U.S. dollar index, which tracks the greenback against a basket of six major currency peers, was marked 0.15% lower in early trading at 105.876. It had hit the highest since November 2 over the weekend, suggesting investors are setting up for a week of risk aversion as geopolitical tensions continue to simmer.
Gold, another safe-haven asset, was marked 1.2% higher in Sunday deal and changing hands at $2,371.73 per ounce.
More Economic Analysis:
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The market's key volatility gauge, the CBOE's VIX index, soared 14.55% in after-hours trading to a late October higher of $17.08. That suggests traders are expecting daily swings for the S&P 500 of around 54 points, or 1.07%, each day for the next month.
"A classic defensive playbook has gone into effect as participants reduce exposure and derisk ahead of the weekend, amid the potential for significant gapping risk at the Sunday market open," said Michael Brown, senior research strategist at London-based Pepperstone.
"It is only reasonable to expect stronger prices when trading resumes.
— Art Berman (@aeberman12) April 14, 2024
"Having said that, there has been no impact on production so far and Iran has said that 'the matter can be deemed concluded'.
--Tamas Varga, PVMhttps://t.co/AGwTYhp7at#energy #OOTT #oilandgas #WTI #CrudeOil… pic.twitter.com/hUQHJdv7eg
Iran seized an Israeli-affiliated cargo ship, the MSC Aries, near the Strait of Hormuz on Saturday. The Aries, which flies a Portuguese flag, is part of the Zodiac shipping group owned by Israeli billionaire Eyal Ofer.
Global oil prices, which closed at $90.45 per barrel on Friday after extending their five-month gain to around 32%, were marked modestly lower in the early hours of trading, with Brent contracts for June delivering falling 52 cents to $89.93 per barrel.
WTI futures for May delivery, which are closely linked to U.S. domestic gasoline prices, slipped 71 cents to $85.09 per barrel.
"Crude prices already included a risk premium, and unless the market faces a real disruption to supply, the risk of an upside spike towards $100 remains limited," Saxo Bank strategists wrote Monday. "All eyes on Israel, and their response."
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