US close: Stocks end mixed amid worries about rising rates
US stocks ended a choppy session mixed on Monday as investors continued to fret about rising interest rates, with the third-quarter earnings season due to kick off later in the week.
The Dow Jones Industrial Average closed up 0.2% at 26,486.78, while the S&P 500 was flat at 2,884.43 and the Nasdaq fell 0.7% to 7,735.95. Stocks on Wall Street fared a lot better than their European counterparts, likely helped by the fact that bond markets - which saw yields surge to multi-year highs last week on the back of solid economic data - were closed for Columbus Day.
Technology stocks were among the worst performers, while consumer staples and utilities gained.
CMC Markets analyst David Madden said: "The yield on the 10-year hit a fresh seven year high on Friday, and dealers are using that as a cue to exit the stock market for fear of higher rates. The Fed have upped interest rates three times in 2018, and traders are pricing in a high probability of a hike in December too. The inflation report on Thursday will be closely watched and further advances in government bond yields could put additional pressure on stocks."
Stocks in Asia had fallen heavily, with the Shanghai Composite down 3.7% after the People's Bank of China cut banks' reserve requirement ratio by 100 basis points to boost liquidity and lending. Market analysts said the fact that Chinese authorities are reducing the amount of capital banks need to hold in relation to their loan book suggests concerns about the economy, in turn sparking worries that China is gearing up for a protracted trade conflict.
In Europe, meanwhile, the main indices all ended in the red after the EU reiterated its concerns over Italy's budget plans over the weekend. The European Commission said Italy's proposal to set out a deficit target of 2.4% of GDP for next year was a "source of serious concern". The news sent Italian government bond yields surging and the FTSE MIB tumbling.
In US corporate news, Ensco and Rowan closed up after the companies agreed to combine in an all-stock deal with an enterprise value of $12bn.
Electric car maker Tesla fell even after the company said on Sunday night that it has reached its goal of making the Model 3 sedan the safest car ever built.
Alphabet ended on the back foot following a Wall Street Journal report that Google failed to disclose a software glitch this spring that left data from users of the Google+ social network exposed.
Elsewhere, Lannett shares tumbled more than 20% after the pharmaceutical company announced that it has engaged advisors to explore and evaluate a range of alternatives regarding its debt and capital structure.