Stock Market Reverses Higher As Benchmark Yield Backs Off From 5%; Apple Tries To Avoid This Blemish

The stock market reversed and turned positive at midday Monday as the benchmark 10-year Treasury yield came down after topping the 5% level. Still, major earnings reports, the Middle East conflict and other risks confront investors this week.

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The Nasdaq composite erased a 1% loss and was up 0.5% at midday, tying to get back above the 13,000 level. The S&P 500 climbed 0.2% and tried to regain its 200-day moving average. The small-cap Russell 2000 was up 0.3%.

The Dow Jones Industrial Average was flat after erasing losses. Walgreens Boots Alliance (WBA) led the Dow with a 5% increase. JPMorgan upgraded the stock to overweight from neutral as Tim Wentworth began work as the company’s new chief executive.

Apple (AAPL) is trying to avoid a seventh straight drop, which would be the longest since January 2022, according to Dow Jones Market Data. The stock, however, found support at its 200-day moving average and was down only 0.2% at midday.

Volume rose on the Nasdaq and fell on the New York Stock Exchange compared with the same time on Friday.

Innovator IBD 50 ETF (FFTY) also reversed higher, up 0.1% at midday after falling to the lowest since July 2016. Of note, IBD 50 stock Chubb (CB) fell below the 50-day moving average as its breakout at 216.09 sputters.

The 10-year Treasury yield climbed as high as 5.017% earlier today. At 10:25 a.m. ET, the yield eased to 4.86%.

Stock Market Faces Big Risks

Geopolitical risk grew as Israel intensified strikes in Gaza, and the conflict threatened to expand into Lebanon and other areas. Hamas continues to hold hundreds of hostages, while diplomatic efforts continue to try to free them and to provide aid to Gaza residents.

The stock market today also faces a week of major earnings reports, including Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META) and Amazon.com (AMZN).

Despite global risks, the price of U.S. crude oil dropped 0.8% to $87.33 a barrel. Energy Select Sector SPDR (XLE) sank 0.8%, falling back below the 50-day moving average.

The energy sector saw big merger news Monday, when Chevron (CVX) agreed to acquire Hess (HES) in a stock deal valued at $53 billion. Hess is an oil and gas producer with operations in North Dakota and has a stake in a massive oil find in Guyana.

Chevron stock gapped down 2.6% in heavy volume, while Hess shares reversed slightly lower. It was the latest move by a U.S. oil major to consolidate production, following Exxon Mobil‘s (XOM) $60 billion acquisition of Pioneer Natural Resources (PXD) just two weeks ago.

Stocks See M&A Activity

Deal-related trading accounted for some movement in Monday’s stock market.

Roche Holding (RHHBY) agreed to buy immunology company Telavant for $7.1 billion. Roivant Sciences (ROIV), which owns a 75% stake in Telavant, fell 4% and Pfizer (PFE), which owns the remaining 25%, climbed 1.7%. Roche’s U.S.-traded shares were down 0.3%.

Textainer (TGH) shares soared 3% after the company announced it will go private through an acquisition by private equity firm Stonepeak. The deal values the shipping container leasing firm at $50 per share in cash, or more than $2 billion.

Vista Equity Partners announced it will acquire EngageSmart (ESMT) in a $4 billion deal. Vista is offering shareholders $23 a share. ESMT shares jumped more than 12%. EngageSmart develops cloud-based software to manage medical offices. It also offers electronic-invoice technology.

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