Treasury yields plunged on Monday from the high levels they had not recorded in over a decade. Meanwhile, stocks rallied to start a new quarter and month. The major averages maintained gains all day to close the third quarter of 2022 and the first trading day in October on a high note. The Dow Jones Industrial Average closed about 2.7%, or 765.38 basis points, higher at 29,490.89.
Likewise, the Nasdaq Composite increased by nearly 2.3% to close at 10,815.43. The S&P 500 advanced almost 2.6% from falling to its lowest last Friday in two years to 3,678.43. Monday was the best day for S&P 500 since July 27th and the best day for the Dow since June 24th. In any case, the ten-year US Treasury note yield plunged to trade at almost 3.65%, following a 4% top-level at one point last week.
Nonetheless, the Dow Jones closed below 29,000 on Friday for the first time in two years. Overall, Wall Street is recovering from the tough last month, with the S&P 500 and Dow hitting the most significant monthly loss in two years. The Nasdaq Composite lost 10.5% in September, while the Dow and S&P 500 lost 8.8% and 9.3%, respectively.
During the previous quarter, the Dow Jones average fell by 6.6% to record a three-quarter losing period for the first time since the 2015 3rd quarter. Besides, the Nasdaq Composite and S&P 500 lost 4.11% and 5.28%, respectively. Thus, they closed their 3rd sequential negative quarter for the first time in ten years. Investment strategists are unsurprised by the rally Monday, considering how oversold the capital markets have been since late 2020. Nine of the 11 sectors in the S&P category closed the previous quarter with negative figures.
Then again, utility stocks and materials & energy shares helped increase the broader market on Monday. Generally, the SPDR Utilities Select Sector Fund increased by nearly 3.5%. Duke Energy increased by 3.2%, Southern Co. rose almost 3.4%, the ETF gained 3.7%, and NextEra accounted for one-sixth of the gains. Nevertheless, utilities attract more debt and come with demanding refinancing requirements that they require a lift from the collapsing bond yields. Utilities with over-average dividend yields face less competition whenever Treasury yields weaken.
Unfortunately, Henry Hub gas futures fell by 4%, making it the only weaker contract in the energy complex. Therefore, utility investors experienced some level of deal flow on Monday. Algonquin Power sold stakes in Canadian and US wind farms to InfraRed Capital Partners. Con Ed sold to Germany’s RWE its Con Edison Clean Energy Firm for a $6.8 billion enterprise value. Above all, Edison International & Alliant Energy remained neutral, and Constellation Energy, Exelon & Dominion Energy outperformed.
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