Stocks higher even with yields rising. It indicates the market has priced out the risk of recession while pricing in Fed Powell’s willingness for another 50-basis point cut. We are also starting the third week of third quarter earnings which is packed with Big Tech earnings’ results.

The Russell 2000 is in the lead, up 1.47%, and bouncing off the 50 MA at $2,197.74.

The 10-year yield is at its highest level since late July and close to hitting 4.3%, a level the Street is watching.  The surge in yields consolidated after the 2-year auction (more on this below).

The 2-year Note Auction suggests robust demand, but also mixed investor sentiment.

• High yield 4.13%, exceeding WI (when-issued) 4.122%
• Bid-to-Cover ratio 2.5, down from 2.59 prior

The 5-year Note auction of $70 billion was on the weak side.

• High yield 4.138%, exceeding WI (when-issued) 4.122%
• Bid-to-cover ratio 2.39, up from 2.38 prior

All sectors are moving higher today except for Energy (XLE), down 0.89%. The leading sector is Utilities (XLU), up 1.14%, followed closely by Financials (XLF), up 1.04%.

The move in Energy is driven by the drop in oil prices, now down 5.8%. It is now again below the critical level at $70. The move in crude oil today came as Israel limited its strikes on to military targets and not on nuclear or oil facilities, as feared.

The Dallas Fed Manufacturing Index indicated continued moderate growth, though at a slightly decelerated pace in October. New orders and production saw modest expansion while manufacturing activity was steady.