S&P 500 falls to start August following its best month since 2020

The closely watched 10-year Treasury yield continued to slide Monday, as traders worried about economic weakness. 

The 10-year yield, which moves opposite price, was at 2.61% in afternoon trading, after earlier falling below 2.60%. It was as high as 2.69% earlier in the session. Traders said the break below 2.70% was significant.

“There’s growing apprehension about the overall trajectory of the U.S. economy,” said Ian Lyngen, head of U.S. rates strategy at BMO. “If we break 2.55%, then 2.50% becomes an attractive level.”

He said the market is also pricing out some inflation expectations. “Energy prices are off today and that’s helping.”

The 10-year yield is key since it impacts mortgage rates and other consumer and business loans.

—Patti Domm

Stocks fell slightly into negative territory heading into the last hour of trading on Monday. The S&P 500 slipped 0.19% and the Nasdaq Composite lost 0.001%. The Dow Jones Industrial Average was down 7 points, or about 0.03%.

— Carmen Reinicke

July’s S&P 500 gains marked the second bear market rally of more than 10% this year, Savita Subramanian, BofA Securities head of U.S. equity and quantitative strategy, wrote in a Monday note to clients.

“We view this as a bear market rally, which is common, occurring 1.5 times on avg. per bear market since 1929,” Subramanian said. Aug. and Sept. are traditionally weak months for stocks, the strategist added and maintained the firm’s 3600 price target for the S&P 500.

This July was also the month’s best performance since the Great Depression, according to the note.

— Carmen Reinicke

Oil and gas stocks fell hard as oil slumped nearly 5%.

Mark Newton, Fundstrat global head of technical strategy, expects oil could to continue to decline to the $85 per barrel range. West Texas Intermediate crude futures were just under $94 per barrel in afternoon trading.

“Most of energy can get smushed in the short run,” he said. “I am a longer term energy bull.”

But in the near term, oil is making a technical break, he said. “Energy is not going to be the place to hide in August.”

The Energy Select Sector SPDR Fund ETF, which represents the S&P energy industry, was down 2.4% in afternoon trading. Exxon Mobil was down more than 2.5%, and Chevron was off just about 2%.

—Patti Domm

Shares of Devon Energy were halted as the company released its second-quarter earnings report on Monday afternoon. The stock was last down 1.7% for the session.

Devon said it earned an adjusted $2.59 in earnings per share and generated $2.1 billion in free cash flow, which was the largest in the firm’s history. The company also declared a dividend of $1.55 per share and announced that it was raising production targets for the full year by…