Stock Market News: Dow Falls

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Stocks fell again on Monday as bond yields and volatility spiked amid worries about the timing of interest rate cuts and conflict in the Middle East.

The Dow Jones Industrial Average fell around 250 points, or 0.7%. The S&P 500 was down 1.2%. The Nasdaq Composite was down 1.8%. The Dow has fallen in 10 of its past 11 trading days. It hasn’t suffered such a stretch since it fell 10 out of 11 days in late February 2020, according to Dow Jones Market Data.

After rallying for months to record highs, the stock market finally found an excuse to pull back in recent days. Last week it was pressured by hotter-than-expected inflation data, followed by reports that Iran planned to attack Israel.

This week, traders are worried about how Israel might respond after Iran sent hundreds of drones and missiles toward Israel over the weekend. With help from the U.S. and other nations, nearly all of them were downed.

“The world will be watching in the coming days how Israel responds to the Iranian attack,” writes Fundstrat’s Washington Policy Strategist Tom Block. “President Biden and the G-7 leaders have fully supported Israel but have also urged caution to avoid a wider war. The leaders seek a ceasefire in Gaza, a return of Hamas held hostages, and restraint by Israel towards Iran.”

The CBOE Volatility index spiked 10% to above 19.04. It hasn’t settled above 18 in 112 trading days.

Retail sales data also came in hotter than expected, sending yields higher. The 2-year Treasury yield rose to 4.935%. The 10-year yield hit 4.627%, its highest yield since Nov. 13, 2023, according to Dow Jones Market Data records of levels as of 3 p.m. Eastern time.

Though the retail sales data showed a resilient consumer, it also bolstered the case for the Federal Reserve to keep interest rates steady through its next few meetings.

Fed Chair Jerome Powell and Vice Chair Philip Jefferson are both slated to speak on Tuesday. Traders will be paying close attention ahead of the Federal Open Market Committee’s April 30 to May 1 meeting.