Investing.com -- The Dow closed lower Monday, pressured by a McDonald's-driven wobble in consumer stocks and jump in Treasury yields after Chairman Jerome Powell shackled hopes of a sooner interest rate cut.
By 16:00 ET (21:00 GMT), the Dow Jones Industrial Average slipped 274 points or 0.7%, the S&P 500 fell 0.3%, the tech-heavy Nasdaq Composite fell 0.2%.
Treasury yields rise after Powell signals patience on cuts
In an interview Sunday with CBS' "60 Minutes" that aired on Sunday. Powell told the news program that the resilient U.S. economy can give Fed officials more time to take a "prudent" approach to possible benchmark interest rate reductions.
Powell added that he would like to "see the data confirm" that inflation -- the major focus of an aggressive series of Fed policy tightening that has pushed borrowing costs up to more than two-decade highs -- is cooling back down to the central bank's stated 2% in a "sustainable way."
The cautious view on rate cuts, pushed Treasury yields higher as bets on rate cuts were reined in, with traders now pricing just a 16% cut in March, well below the 80% peak seen earlier this year, and now see just five cuts for this year compared with six previously.
The rate-sensitive United States 2-Year yield and the benchmark 10-year yield, which typically move inversely to prices, were higher following Powell's comments.
McDonald's slumps after Q4 sales miss to pressure consumer stocks lower
McDonald’s (NYSE:MCD) fell more than 3% reported fourth-quarter comparable sales growth of 3.4%, missing Bloomberg consensus estimates of 4.79%, as the burger chain's international operations were dented by boycotts relating to the violence in the Middle East.
The impact of boycotts are expected to continue as long as the war rages, the company warned, following a "meaningful" impact in Q4.
As well as a slump in McDonald's, an ongoing selloff in Tesla (NASDAQ:TSLA), and weakness in cruise stocks including Carnival Corporation (NYSE:CCL) added further pressure on consumer stocks, which were one of the worst performing sectors on the day.
Nvidia (NASDAQ:NVDA) in fresh record high after Goldman Sachs backing; Caterpillar shines; Boeing slips on potential delays
Nvidia closed at a fresh record high after Goldman Sachs lifted its price target on the chipmaker to $800 from $625, suggesting 16% upside from current levels, amid optimism that surge in spending on generative artificial intelligence will support continue to underpin demand for Nvidia's artificial-intelligence
Goldman Sachs, citing fresh industry data, said it no longer expects a slowdown in data center spending amid a "robust" Gen-AI demand.
Caterpillar (NYSE:CAT), the machinery manufacturer that is often viewed as a bellwether for the American industrial sector, rose more nearly 2% after posting fourth-quarter adjusted per-share profit that topped expectations, as higher prices helped offset a dip in sales volume. Shares in Caterpillar rose sharply in early U.S. dealmaking.
Boeing (NYSE:BA) fell more than 1% after the embattled planemaker warned that a fresh issue in some fuselages of its 737 jets could lead to the "near-term" delivery delays.
Scrutiny over the safety of Boeing jets has been rising since a dangerous mid-air door plug breach on one of its 737 Max 9 planes operated by Alaska Airlines last month. In the wake of the incident, Boeing has not offered a forecast for its 2024 financial year, stating that it still has "much to prove" to win back the confidence of regulators and passengers.
Corporate Earnings Parade to Continue
Media firms will also be in focus in the coming days, with results ahead from the industry leaders like Walt Disney (NYSE:DIS), Fox, and Warner Music Group.
Chinese e-commerce player Alibaba (NYSE:BABA), ride-sharing firm Uber (NYSE:UBER), and chip designer Arm Holdings (NASDAQ:ARM) are slated to report this week.
(Scott Kanowsky, Oliver Gray contributed to this report.)