U.S. Stock Markets: Interest Rate Hike Initiates a Breather in Record Rally

Following a remarkable soar, U.S. stock markets experienced a cooling of their rallies at the start of the week. Increasing yields on ten-year U.S. Treasury bonds signaled rising interest rates and led to more cautious investor sentiment. Despite initial losses, stock indices managed to recoup some of their declines. While the Dow Jones Industrial Average had to endure a drop of 0.71 percent, the Nasdaq 100 proved more resilient with a moderate decrease of 0.17 percent. The broader S&P 500 also recorded only a slight loss of 0.32 percent. Market observers had recently adjusted their hopes for a quick interest rate cut, not least because of robust U.S. labor market data and restrained comments from Federal Reserve Chair Jerome Powell regarding imminent rate cuts. Exceeded expectations in the service sector sentiment data provided additional momentum. Among corporate developments, quarterly reports drew particular attention. The balance sheets painted a mixed picture: McDonald's suffered a sales slump due to the Gaza conflict, which led to a nearly 4 percent decline in its share price. In contrast, Caterpillar benefited from increased demand in certain industries and recorded a share price increase of 2 percent. Boeing faced technical issues with some of its 737 Max aircraft, causing its shares to drop by 1.3 percent. Other movements included Air Products, where a lowered earnings forecast led to a nearly 16 percent plunge in the stock. In contrast, Nvidia enjoyed a surge of 4.8 percent thanks to a positive price target revision by Goldman Sachs. Estee Lauder also trended upwards, gaining 12 percent after announcing job cuts. The euro was under pressure in light of U.S. economic data, trading last at a rate of 1.0742 dollars. The European Central Bank set the reference rate at 1.0746 dollars. A turn towards safe-haven assets resulted in a decline in prices on the U.S. bond market; in return, the yield rose to 4.17 percent.