Stocks kicked off the new month and quarter on a relatively quiet note, even as Congress over the weekend passed a stopgap spending measure to avoid a shutdown and fund the government through mid-November.
While all three benchmarks spent some time in positive territory today, rising Treasury yields and a round of hawkish commentary from several Federal Reserve officials brought them off their session highs.
When the equities market closed last Friday, it seemed all but certain a government shutdown would occur over the weekend. However, late Saturday, Congress passed a 45-day spending bill that will provide funding through mid-November.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The news initially sent stocks higher in premarket trading before gains faded Monday morning," says Jeffrey Buchbinder, chief equity strategist at LPL Financial. "But before you get too comfortable, keep in mind in six weeks we may be right back in the same situation we were in last week."
Treasury yields keep climbing
Meanwhile, the bond market continued to struggle, with yields on the 2-year and 10-year Treasuries hitting their highest levels since 2006 and 2007, respectively. Specifically, the yield on the 2-year note rose 6.4 basis points to 5.11%, while the 10-year yield climbed 11.8 basis points to 4.689%. (A basis point = 0.01%.)
"From a fundamental perspective, rates have been driven higher by a U.S. economy that has continued to outperform expectations, pushing recession expectations out further, and by the unwinding of rate cut expectations by the Federal Reserve to be more in line with the Fed's 'higher for longer' regime," Buchbinder says.
Federal Reserve Governor Michelle Bowman said earlier today that "further rate increases will likely be needed to return inflation to 2% in a timely way." Additionally, Fed Governor Michael Barr this afternoon said interest rates will need to be held at "a sufficiently restrictive level" for "some time" in order for inflation to come down to the central bank's target.
Nvidia can rally another 35%, analyst says
As for the major indexes, the Dow Jones Industrial Average (-0.2% at 33,433), while the S&P 500 was fractionally higher at 4,288. The Nasdaq Composite, on the other hand, held on for a 0.7% gain at 13,307 thanks to upside in several mega-cap stocks.
Nvidia (NVDA), for one, jumped 3.0% – gaining $32 billion in market capitalization – after Goldman Sachs added the semiconductor stock to its conviction list given the company's competitive moat in the artificial intelligence (AI) space.
NVDA is "the principal 'shovel supplier' in the AI 'gold rush'," says Goldman Sachs analyst Toshiya Hari. However, the company is also seeing solid data center strength, with sales nearly tripling in the most recent quarter, and supply issues are abating, the analyst adds. Hari has a $605 price target on Nvidia, implying expected upside of roughly 35% to current levels.
Related content
-
Standard Deduction 2026 Amounts Are HereTax Breaks What is the standard deduction for your filing status in 2026?
-
New 2026 Tax Brackets Are Set: What to Know NowIncome Tax The IRS has adjusted federal income tax bracket ranges for the 2026 tax year to account for inflation. Here's what you need to know.
-
If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have TodayBank of America stock has been a massive buy-and-hold bust.
-
Investors Take Stock of Shutdown Talk: Stock Market TodayWhether we'll have a Jobs Friday this week depends on if we have a government shutdown in Washington.
-
If You'd Put $1,000 Into Oracle Stock 20 Years Ago, Here's What You'd Have TodayORCL Oracle stock has been an outstanding buy-and-hold bet for decades.
-
How to Invest for Rising Data Integrity RiskAmid a broad assault on venerable institutions, President Trump has targeted agencies responsible for data critical to markets. How should investors respond?
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have TodaySherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages — until it wasn't.
-
Stocks Struggle to Start Nvidia Week: Stock Market TodayAnother important week for the stock market starts on a risk-off note.
-
Dow Jones Adds 463 Points as Rate-Cut Odds Rise: Stock Market TodaySome futures traders are now pricing in the possibility of a jumbo rate cut in September, which lifted stocks today.
