US markets started the week with mixed performance on Monday, as the Dow Jones Industrial Average climbed over 350 points, boosted by a rotation into energy, health care, and materials stocks, while the Nasdaq Composite slipped amid continued weakness in major tech shares. The rise in bond yields, with the 10-year Treasury touching its highest level since November 2023, further pressured growth-oriented stocks, signalling investor caution ahead of key inflation and earnings data expected later this week. Despite the tech sell-off, strength in sectors like energy and promising corporate upgrades helped lift the broader market sentiment, keeping the S&P 500 marginally positive.

Key Takeaways:

  • Dow Posts Strong Gains Amid Rotation into Non-Tech Sectors: The Dow Jones Industrial Average surged 358.67 points, or 0.86%, to close at 42,297.12, as investors shifted their focus away from technology stocks and into sectors like energy, health care, and materials. Key contributors to the Dow’s rally included Caterpillar, JPMorgan Chase, and UnitedHealth, which benefited from broader market rotations. 
  • Nasdaq Drops as Tech Sell-Off Deepens: The Nasdaq Composite fell 0.38% to 19,088.10, as traders continued to pull back from high-growth tech names. Palantir dropped more than 3%, extending its losses from last week to over 15%. Nvidia also shed nearly 2% on Monday, following a decline of almost 6% last week. 
  • S&P 500 Sees Modest Gains Supported by Energy and Materials: The S&P 500 edged up 0.16% to close at 5,836.22, lifted by strength in the energy and materials sectors, which offset declines in technology. Energy stocks, in particular, outperformed as oil prices climbed to multi-month highs..
  • Bond Yields Hit Multi-Year Highs, Adding Market Pressure: The 10-year Treasury yield rose to 4.79%, marking its highest level since November 2023, as investors adjusted to stronger-than-expected labour market data released last Friday. Higher yields have pressured growth-oriented sectors, particularly technology, while making non-cyclicals like energy and health care more attractive. The 2-year Treasury yield eased slightly, ending at 4.392%, but remains elevated compared to historical levels.
  • Energy Sector Leads Gains as Oil Prices Hit Five-Month Highs: The energy sector outperformed broader markets, rising over 2%, as oil prices surged on the back of new US sanctions targeting Russian exports. West Texas Intermediate (WTI) crude climbed $2.13, or 2.77%, to $78.70 per barrel, while Brent crude rose $1.37, or 1.09%, to $80.85 per barrel. Energy stocks like Valero Energy, Marathon Petroleum, and Baker Hughes gained over 3%, while Exxon Mobil, ConocoPhillips, and Devon Energy advanced more than 2%.
  • European Markets Decline Amid Rising Bond Yields: European markets struggled on Monday, as surging bond yields and a strong US dollar weighed on sentiment. The pan-European Stoxx 600 fell 0.55%, with technology stocks dropping 1.2% and the real estate sector losing 1.3%. The UK’s FTSE 100 declined 0.29% to close at 8,224.19, while France’s CAC 40 and Italy’s FTSE MIB fell 0.3% and 0.83%, respectively. Meanwhile, the 10-year German bund yield hovered near its highest level in over six months, further reflecting rising global yield pressures.
  • Asia-Pacific Markets Slide Following Strong US Jobs Report: Asia-Pacific markets mostly closed lower on Monday, as investors digested Friday’s robust US labour market data, which dampened expectations for early Federal Reserve rate cuts. Mainland China’s CSI 300 index fell 0.27% to 3,722.51, while Hong Kong’s Hang Seng Index dropped 0.73%, slipping below 19,000 for the first time since September 2024. India’s Nifty 50 and BSE Sensex indices lost 0.95% and 0.80%, respectively, while South Korea’s Kospi fell 1.04%, and Australia’s S&P/ASX 200 declined 1.23% to 8,191.90. Japan’s markets remained closed for a holiday.

FX Today:

  • EUR/USD Drops to Two-Year Low Amid Surging Dollar: The EUR/USD pair was flat on Monday, closing at $1.0244, marking its weakest point against the dollar since November 2022. The pair has broken below key support levels, including the 50-day SMA at 1.0503 and the 200-day SMA at 1.0787. This marks a significant deterioration in market sentiment, with the euro struggling to find a bottom amid persistent dollar strength. Key support lies at 1.0100, with parity at 1.0000 serving as a psychological level that could attract significant market interest. A break below these levels could see EUR/USD targeting 0.9900, last seen in early 2020. Resistance is now situated at 1.0300, where sellers have repeatedly capped attempts at recovery since late 2024. 
  • GBP/USD Tests Key Support as Sterling Weakens: GBP/USD dropped 0.3% on Monday, closing around $1.2202, as the pair continued to slide under the pressure of a strong US dollar. Pound is losing ground as it continues its downward trajectory from the highs near 1.3300 seen in mid-2024. The pair is now trading below both its 50-day SMA at 1.2637 and 200-day SMA at 1.2800, highlighting the strength of bearish sentiment in the market. Immediate support lies at 1.2100, with a potential extension toward the psychological 1.2000 level, last seen in December 2022. On the upside, resistance is located at 1.2300, followed by 1.2500, where sellers have previously rejected recovery attempts
  • USD/CHF Gains as Dollar Strength Persists: USD/CHF traded at 0.9164 on Monday, showing strong upward momentum driven by the dollar’s rally. The pair has broken past significant resistance levels, including the 50-day SMA at 0.8901 and the 200-day SMA at 0.8831, signalling bullish sentiment. Immediate resistance lies at 0.9300, with a breakout above this level potentially targeting 0.9400. On the downside, support is seen at 0.9100, with a deeper correction possibly revisiting the 200-day SMA. Traders remain cautious as RSI indicators approach overbought territory, suggesting potential short-term consolidation.
  • Gold Faces Resistance Amid Dollar Strength: Gold prices declined 1.01% on Monday, closing at $2,662 as the metal struggled to sustain momentum above the critical $2,700 resistance level. Despite support from its 50-day SMA at $2,643.88 and its 100-day SMA at $2,633.88, rising Treasury yields and a surging dollar added pressure. On the downside, support lies at $2,620, with further declines potentially targeting $2,580 and $2,550. However, a successful breach above $2,700 could trigger a rally toward $2,750 and $2,800. Momentum indicators suggest consolidation, with traders awaiting US inflation data later this week for further cues.
  • Silver Breaks Below $30.00 Amid Weak Momentum: Silver dropped 2.56% on Monday, closing at $29.60 as it failed to maintain momentum above the psychological $30.00 level. The metal also fell below its 50-day SMA at $30.4199, signalling continued bearish pressure. Immediate support lies at $29.00, with further declines potentially targeting $28.50 and $27.50, levels last tested in mid-2023. On the upside, resistance is seen at $30.00, followed by $31.50, which acted as a cap during the August 2024 rally. Momentum indicators remain bearish, reflecting weak industrial demand and a stronger dollar, both of which continue to weigh on silver prices.

Market Movers:

  • Health Insurers Rally on Medicare Advantage Proposal: Health insurance companies with Medicare Advantage plans surged Monday after Medicare released a proposed plan that could allow payment increases in 2026. CVS Health (CVS) led the gains, closing up more than 7%, while Humana (HUM) rose over 6%. Elevance Health (ELV) and UnitedHealth Group (UNH) also climbed, gaining more than 4% and 3%, respectively. 
  • Mosaic Soars on Upgrade: Mosaic (MOS) jumped over 8% to lead the S&P 500, following an upgrade from Piper Sandler to neutral from underweight. The upgrade reflects optimism about improving demand dynamics for the agricultural and materials sectors. 
  • Intra-Cellular Therapies Skyrockets on Acquisition News: Intra-Cellular Therapies Inc (ITCI) surged over 34% after Johnson & Johnson announced its plans to acquire the company for approximately $14.6 billion. 
  • Losses Mount for Mega-Cap Tech Stocks: Major technology companies continued to weigh on the broader market. Nvidia (NVDA) fell nearly 2%, extending its losses from last week to almost 6%. Meta Platforms (META) and Apple (AAPL) dropped over 1%, while Alphabet (GOOGL) and Amazon.com (AMZN) declined by 0.58% and 0.22%, respectively. 
  • Moderna Plummets on Lower Revenue Forecast: Moderna (MRNA) dropped more than 16%, leading the S&P 500 losers, after the company slashed its 2025 revenue guidance to $1.5 billion–$2.5 billion, down from its previous forecast of $2.5 billion–$3.5 billion. 
  • Californian Utility Stocks Tumble Amid Wildfire Risks: Edison International (EIX) fell over 11%, while PG&E Corp (PCG) lost more than 5%, and Sempra (SRE) dropped more than 2%. The declines came as investors remained cautious about the financial risks tied to potential liability for Southern California wildfires, extending losses from last week.
  • iRobot Corp Plunges on Weak Revenue Guidance: iRobot Corp (IRBT) slumped over 22% after reporting preliminary Q4 revenue of $171 million, well below analyst expectations of $188 million. 

As the week begins, markets remain divided, with the Dow surging over 350 points on strength in energy and health care, while the Nasdaq faltered under pressure from continued tech sector sell-offs. Rising bond yields, with the 10-year Treasury hitting a 14-month high, have become a central concern, intensifying headwinds for growth stocks. Globally, European and Asia-Pacific markets faced declines, driven by rising yields and a strengthening US dollar, which reached its highest level in more than two years. Oil prices surged on expectations of disrupted Russian supply, boosting energy stocks, while gold and silver retreated under dollar strength. As investors brace for key inflation data and earnings reports later this week, uncertainty around Federal Reserve policy and global growth prospects continues to weigh on sentiment, signalling potential volatility ahead.