The stock market faced some selling pressure after six straight weeks of gains for the S&P 500. The S&P 500 closed 1.0% lower last week and the Dow Jones sank 2.7%. The profit-taking activity was fueled by rising market rates. The yield on the 10 year US Treasury ended 16 basis points higher last week at 4.23% and the 2-yr yield settled 15 basis points higher this week at 4.10%. This week’s selling in the Treasury market expanded the 2s10s spread by one basis point to 13.<\/p>\n\n\n\n
The Nasdaq managed to settle 0.2% higher for the week, benefitting from buying activity in mega caps and semiconductor shares. The Vanguard Mega Cap Growth ETF (MGK) rose 0.3% and the PHLX Semiconductor Index (SOX) eked out a 0.1% gain. Some of the buying in mega cap shares was related to the huge jump in Tesla (TSLA) following impressive Q3 earnings and an aggressive 2025 vehicle growth forecast.<\/p>\n\n\n\n
On Friday we received Durable Orders for the month of September which came in at -0.8% (consensus -0.9%) and August\u2019s orders were revised downwards to -0.8% from 0.0%. However, September Durable Orders ex-transportation came in at +0.4% (Briefing.com consensus -0.1%). The key takeaway from the report is that it had a split growth personality. A 0.5% increase in nondefense capital goods orders excluding aircraft conveyed a pickup in business spending, yet the 0.3% decline in shipments of nondefense capital goods orders excluding aircraft, which factors into GDP computations, declined 0.3% on the heels of a 0.1% decline in August and a 0.4% decline in July. <\/p>\n\n\n\n
Over the weekend, Israel launched a reprisal attack against Iranian military targets.\u00a0 Preliminary reports indicate that neither Iranian energy production infrastructure nor nuclear sites were hit.<\/p>\n\n\n\n
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