Markets slid lower as the 10-year Treasury yield exceeds 4%

Dow dropped 127, decliners over advancers about 3-1 & NAZ pulled back 67.  The MLP index was even in the 289s & the REIT index fell 3+ to the 434s on higher yields.  Junk bond funds were mixed & Treasuries saw more selling which raised yields again (more below).  Oil added 1+ to the low 76s (more below) & gold slid 6 to 2660.

Dow Jones Industrials

When shoppers walk into Sam's Club's newest store, they'll soon see a shiny blue Mercedes-Benz SUV, a sectional sofa & zero checkout lanes.  Welcome to the Walmart (WMT), a Dow stock & Dividend Aristocrat,-owned membership clubs first all-digital store & a preview of what could be its future.  Inside the club, which will open in mid-Oct, customers will have to use a smartphone app called Scan & Go to ring up their purchases as they walk thru the aisles.  In the area typically reserved for cash registers, the company will show off online-only items as wide-ranging as a 12-foot Christmas tree & a 5-carat lab-grown diamond.  Members can scan QR codes & go straight to the items in the app.  Store workers will have about 4 times more space for preparing customers' e-commerce orders for curbside pickup & home delivery.  “It’s kind of the physical manifestation of a journey we’re trying to go on as a company,” Sam's Club CEO Chris Nicholas said, as he showed off the club before its grand opening.  Since WMT's founder Sam Walton opened the first Sam's Club in 1983, the membership-based club has become the more tech-savvy arm of its retail-behemoth parent.  The club has spun out several key innovations that its parent company now uses, too, such as Scan & Go.  It's also used digital offerings to try to outmatch its largest rival.  Sam’s Club is doubling down on that strategy with the Dallas-area store, which is reopening nearly 2 years after it was damaged by a tornado.  Nicholas said upon its reopening, the location will become a testing ground for Sam's Club's newest features & emerging technology.  “The idea is that over time, we will be 100% digital engagement as a business, and you’ve got to prove that things work before you scale them,” he said.  He added, he hopes “it feels like what it’s like to shop in the future.”  The stock fell 81¢.

Walmart-owned Sam’s Club tests a future without checkout lines

The 10-year Treasury yield, a benchmark for mortgages & car loans, jumped back above 4% amid stronger labor market readings & despite the start of a Federal Reserve rate-cutting campaign last month.  The 10-year yield was up more than 4 basis points to 4.03%, its highest since early Aug & a big turnaround from its 2024 low of around 3.58% reached a little more than a month ago.  The yield on the 2-year Treasury was up 7 basis points to 4.0%. Yields move inversely to prices & 1 basis point equals 0.01%.  Treasury yields surged Fri as a better-than-expected Sep jobs report lowered expectations that the Fed would do another supersized ½-point cut like it did on Sep 18.  Nonfarm payrolls grew by 254K in Sep, well ahead of the 150K estimated.  The CME Group's FedWatch tool indicates that traders are now pricing in a 91% chance of a qtr percentage point rate cut at the central bank's next meeting in Nov.  Investors believe the rebound in rates is due mostly to a resetting of rate-cut expectations.  Rising oil prices due to geopolitical tensions in the Middle East & a stimulus plan in China are also raising some concern about inflation reigniting, perhaps driving some investors away from bonds & raising yields.

10-year Treasury yield rebounds back above 4%

US crude oil rose about 2%, as the market waited for Israel to strike Iran.  Oil prices spiked last week on fears that Israel could hit Iran's oil industry in retaliation for Tehran's ballistic missile attack.  US benchmark West Texas Intermediate surged 9.1% last week for the biggest weekly gain since Mar 2023 & global benchmark Brent jumped 8.4% for the largest weekly advance since Jan 2023.  West Texas Intermediate Nov contract was $75.93 per barrel, up $1.55 (2.1%) & Brent Dec contract was $79.47 per barrel, up $1.42 (1.8%).  Pres Biden on Fri discouraged Israel from striking Iranian oil facilities, after prices jumped about 5% a day earlier when the pres suggested the US was discussing the possibility of such an attack.  Biden has also said he opposes Israel hitting Iran's nuclear facilities.  The market right now is only pricing in the possibility of Israel striking Iran's oil facilities but that is not the worst-case scenario.  The worst-case scenario is a disruption in the Strait of Hormuz, thru which 20% of the world's crude exports flow.  Iran might target the strait in response to an Israeli strike, which would have a far more dramatic effect on crude prices.

U.S. crude oil jumps 2%, trades near $76 as market waits for Israel strike against Iran

Stocks slipped as investors overhauled their views on interest rate cuts after a strong jobs report ahead of a week of key inflation data & the start of earnings season.  Hopes for an outsized rate cut from the Federal Reserve have melted away after a better-than-expected Sep jobs report on concerns about cracks in the labor market.  The benchmark 10-year Treasury yield hit 4% for the first time since Aug amid doubts about the Fed's next move.