The Dow Jones ended a choppy Monday session down 150 points, when at one point, the index was down 270 points. The index had also briefly turned positive during the course of the session. The S&P 500 and Nasdaq also recovered 25% to 50% of their respective losses to end 0.5% and 0.6% lower respectively.
At one point, the Nasdaq futures were down over 400 points after the chiefs of leading AI companies, OpenAI and Anthropic called for slowing of the rapid development of the technology. Asian markets were also down on Monday as a result of these weekend developments.
US President Donald Trump embarked on a spree of Truth Social posts on a host of subjects that concern the markets, from oil and diesel shortage to AI regulations and even going on to reiterate that Iran badly wants to make a deal, a claim that Iran went on to subsequently reject.
The 10-year bond yield briefly crossed the 5% mark on Monday for the first time since October 2023, before cooling off and then returning back to those levels after the close of trade. Crude oil prices remain above $105 a barrel as a key Saudi pipeline remains shut, with no clarity on repair timelines.
What Next For The US Market?
US markets fell on a day when both bullish and bearish analysts revised their forecast on the index.
Bank of America’s Savita Subramanian, one of the few bearish analysts on the market, revised her S&P 500 projections to 7,400 from 7,100 earlier, still implying a downside potential of 2.9% from current levels. She sees the index retesting 7,800 levels in the next 12 months, implying a mere 2.4% upside from here.
Subramanian flagged that the index is still prone to interest rate and inflation risks, stating that any catalyst pushing costs higher could “hasten the pain” in the market. She added that stocks are “overdue for a pullback” as the market has seen only one 5%-plus drawdown this year, when they usually see three on average.
On the flip side, Tallbracken Capital Advisers’ CEO and Founder Michael Purves raised his target on the S&P 500 to 8,500, the highest now on the street, surpassing Ed Yardeni’s 8,400. He maintained that the equity rally is on “strong legs” and there is hardly any co-relation between the Fed hiking rates and the market having a negative reaction to it.
MRA Capital Advisers warned that the S&P 500 could see a fall between 8% to 10% if the Fed begins to hike rates and while they expect one on Wednesday, they expect another one to take place in December as well.
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