Market Overview
The S&P 500 index has seen a modest increase of +0.35% today. Similarly, the Dow Jones Industrial Average rose by +0.08%, while the Nasdaq 100 index climbed +0.79%. E-mini S&P Futures also experienced a +0.35% rise, with a +0.76% increase in E-Mini Nasdaq futures.
Stocks are on the upswing, likely reflecting a more predictable outlook from the Federal Reserve. Ten-year Treasury note yields have dropped to a five-month low of 4.04%. Market expectations are gearing up for next week’s FOMC meeting, anticipating a 25 basis point hike and a 10% chance of a more substantial 50 basis point cut. However, this week’s CPI and PPI reports from the US will provide insights into how much room the Fed has to maneuver with interest rates to bolster the job market. Notably, stocks took a hit last Friday after a disappointing Payroll Report for August raised concerns over the labor market.
On the trade front, mixed predictions from China regarding global growth have surfaced. August exports from China rose by +4.4% year-over-year, falling short of expectations, and imports increased by +1.3%, again not meeting projections. This week, trade or tariff news will be closely watched. On Tuesday, the Bureau of Labor Statistics will release its annual benchmark revision for US wages through March. Then, on Wednesday, the final demand PPI is expected to remain stable while inching up to +3.3% year-over-year. The CPI for August is predicted to rise from +2.7% in July to +2.9%, while initial unemployment claims are anticipated to drop slightly.
The market is currently pricing in only a 10% chance of a 50 basis point rate cut in future FOMC meetings, which is a shift from previous assumptions. There’s an expectation for a 25 basis point rate cut on September 16-17, with an 81% probability of another cut at the end of October.
In tariff news, a federal court recently ruled that President Trump may have overstepped his authority by imposing tariffs without congressional approval, although those tariffs remain in place while appeals are ongoing. This case is likely heading to the Supreme Court. Analysts suggest that if these tariffs remain, they could significantly increase from 13.3% to 15.2% by 2024.
International Market Trends
International markets are showing positive signs today. The Euro Stoxx 50 is up by +0.61%, while China’s Shanghai Composite has gained +0.38%. Japan’s Nikkei 225 index climbed +1.45% over the last two and a half weeks.
Interest Rates
The 10-year Treasury note is seeing a slight increase today, up by 3 ticks, with yields currently at 4.061%. The market remains sensitive to supply pressures from upcoming Treasury auctions this week.
European bond yields are trending down as well. German bund yields have dipped to a one-month low of 2.638%, and the yield on British gilts has fallen to a three-week low of 4.605%. There’s just a 1% chance that the ECB will cut rates by 25 basis points in its upcoming policy meeting.
Stock Movements in the U.S.
Chip stocks are gaining traction today, with Broadcom soaring over +4%, building on a +9% surge last Friday due to news about collaboration with OpenAI. Other notable performers include LAM Research, which is up more than +3%, and Marvell Technology seeing an increase of +2%. Companies like NVIDIA, KLA Corp, and ASML are also witnessing modest gains.
Applovin is leading the Nasdaq 100 with a rise of over +10% as it is set to replace Caesars Entertainment in the S&P 500. RAPTORT Therapeutics is up more than +134% after positive results for its treatment of local seizures. Meanwhile, Forward Industries has grown more than +46% following significant financial commitments.
In contrast, telecom stocks are struggling. After SpaceX announced plans to purchase wireless spectrum from Echostar, SBA Communications has dropped over -4%. Other telecommunications companies, including T-Mobile and Verizon, also saw declines.
Finally, in the pharmaceuticals sector, Summit Therapeutics has reported new data that raises questions about its lung cancer treatment, causing a drop of more than -21% in its stock price.
Other Notable Stock Movements
Caesars Entertainment saw a decrease of more than -1% due to the upcoming index changes. BXP Inc also dropped by more than -1% after reducing its dividend. Meanwhile, Transdigm Group fell -0.63% following a downgrade from RBC Capital Markets.
