Index Performance
US equities finished modestly higher on Monday as easing bond yields and strength in semiconductor stocks lifted sentiment. The S&P 500 gained +0.21%, the Dow Jones Industrial Average added +0.25%, and the Nasdaq 100 rose +0.46%. Futures also advanced, with September E-mini S&P up +0.25% and Nasdaq futures climbing +0.49%. The 10-year Treasury yield slid to a five-month low of 4.04%, reinforcing bets on a more accommodative Federal Reserve.
Fed Policy and Inflation Data Ahead
Markets are fully pricing in a 25-basis-point rate cut at the September 16–17 FOMC meeting, while the probability of a 50-bp cut has risen to 15%. Looking further ahead, traders see an 81% chance of an additional 25-bp cut at the late October meeting. Overall, markets expect a 76-bp reduction in the fed funds rate by year-end, bringing it down to 3.62% from the current 4.38%.
The week’s key focus will be inflation readings. CPI is expected to accelerate to +2.9% y/y in August from +2.7% in July, while core CPI is projected to remain steady at +3.1% y/y.
Trade, Tariffs, and China
Chinese trade data disappointed, with exports rising just +4.4% y/y and imports up +1.3%, both weaker than forecasts. This has raised concerns about global growth momentum. Meanwhile, US tariff policy remains under scrutiny after a federal appeals court ruled that former President Trump exceeded his authority when imposing global tariffs, although they remain in place pending a Supreme Court review. Bloomberg Economics projects the average US tariff could rise to 15.2%, up from 13.3% earlier this year and sharply higher than the 2.3% level in 2024 before tariffs were imposed.
Bond Market Moves
Treasury yields retreated, with the 10-year note dropping to 4.04% on carryover support from last week’s weak jobs data. Supply pressures loom as the Treasury prepares to auction $119 billion in T-notes and T-bonds this week. In Europe, yields also declined: German 10-year bunds fell to 2.64% and UK gilts to 4.60%.
Stock Movers
Semiconductor names were the clear winners. Broadcom surged another +3% after Friday’s +9% rally, driven by news of a partnership with OpenAI on AI accelerators. Marvell Technology gained +3%, Lam Research +2%, and ASML +1%, while Nvidia and Analog Devices also finished higher.
Other notable movers included:
- AppLovin (APP): +11% on news it will join the S&P 500.
- Robinhood (HOOD): +15% after being added to the S&P 500.
- Rapport Therapeutics (RAPP): +122% on positive seizure treatment data.
- Forward Industries (FORD): +54% after announcing a Solana-focused digital asset treasury strategy.
- EchoStar (SATS): +18% after SpaceX’s Starlink agreed to buy wireless spectrum for $17B.
- Uber (UBER): +3% after teaming up with China’s Momenta to test robotaxis in Munich.
- Oracle (ORCL): +2% after Morgan Stanley raised its target to $246.
On the downside:
- Summit Therapeutics (SMMT): –25% after disappointing lung cancer drug data.
- Norwegian Cruise Line (NCLH): –4% on a $2B bond offering.
- CVS Health (CVS): –3% following cautious comments at a private investor meeting.
- Telecom stocks (TMUS, VZ, T, SBAC): fell on concerns tied to the $17B EchoStar-Starlink spectrum deal.
With Fed policy firmly in focus, upcoming inflation data and tariff developments are set to guide market direction. The chip sector continues to provide leadership, while index inclusions for Robinhood and AppLovin highlight the evolving composition of market benchmarks.
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Twitter: @BigStakeTrades