Nasdaq Hits Record High Amid Dollar Strength and Treasury Yield Surge
The Nasdaq Composite reached a new record high on Monday, driven by gains in megacap and growth stocks. The index rose about 1%, while the S&P 500 added 0.7% and the Dow Jones Industrial Average gained 0.3%. Tech giants like Nvidia (NVDA.O), Meta Platforms (META.O), and Microsoft (MSFT.O) provided strong support. Meanwhile, Treasury yields remained near multi-year highs, and the dollar advanced against the euro, which hit a 17-month low due to concerns over France’s fiscal position.
European markets showed mixed performance, with the pan-regional STOXX 600 index up 0.36%, while French shares fell 0.8% to six-month lows. The euro’s decline was attributed to worries about France’s rising debt and political uncertainty ahead of next year’s presidential election. The single currency briefly dropped to $1.1160 before recovering slightly. The dollar index rose 0.3%, supported by elevated Treasury yields.
In Asia, trading was thin due to holidays in China, South Korea, and Australia’s New South Wales state. However, regional markets followed Wall Street’s gains after weaker-than-expected U.S. labor data last week. Investors now see an 18% chance of a Federal Reserve rate increase this month, down from 64% a week ago. Oil prices eased on Monday after crude exports from the Middle East increased and the Group of Seven pledged to boost supplies, though fears of disruptions from the U.S.-Israeli war on Iran limited further declines.
Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, noted that relative equity market calm amid the bond market’s ‘perfect storm’ is understandable due to accelerating economic growth and the AI boom’s rate insensitivity. She highlighted three areas for signs of stress: equity market and earnings revisions breadth, high-yield bond spreads, and U.S. dollar strength along with currency market volatility.