Index Gains and Falling Yields
US equity indexes closed in positive territory on Monday. The S&P 500 gained +0.26%, the Dow Jones added +0.15%, and the Nasdaq 100 rose +0.44%. Declining Treasury yields supported the move, with the 10-year yield falling by 3 bps to 4.14%. Investors are betting that a series of weak labor market reports will give the Fed room to continue cutting rates.
Chipmakers Drive the Tech Sector
Semiconductor stocks outperformed the market. GlobalFoundries and Micron gained over 3%, Lam Research climbed more than 2% after a Deutsche Bank upgrade, and Nvidia and AMD rose more than 1%. The strength in chipmakers was the main driver of Nasdaq’s gains.
Energy Weakness and Gold Surge
Oil producers weighed on the market as WTI crude plunged more than 3%, dragging Exxon, Chevron, and ConocoPhillips down 2–3%. Meanwhile, gold soared to a record above $3,800 an ounce, supported by Fed easing expectations and tariff-related risks.
Macro Data and Fed Rhetoric
On the data front, US pending home sales jumped +4% m/m in August, the strongest increase in five months, while the Dallas Fed manufacturing index disappointed at -8.7. Fed officials delivered mixed messages: John Williams highlighted receding inflation risks and suggested more rate cuts are sensible, while Beth Hammack warned inflation may not return to the Fed’s 2% target until 2027–2028, arguing for a restrictive stance.
Shutdown Risks and Corporate Deals
A looming government shutdown remains the biggest political risk if Congress fails to pass a stopgap bill by Wednesday. The White House has already warned of large-scale layoffs in non-priority programs.
On the corporate front, M&A and upgrades stood out. Genmab announced an $8B acquisition of Merus (+35%), Electronic Arts rose 4% after being acquired by a private consortium for $55B, and Western Digital surged 9% after a price target hike. On the downside, MoonLake crashed 89% after disappointing trial results.
Outlook
Markets are pricing in an 89% chance of a 25 bp Fed rate cut at the Oct 28–29 FOMC meeting. This week’s focus will be on labor market data (JOLTS, ADP, NFP), ISM surveys, unemployment claims, and tariff-related developments — all of which could fuel volatility.
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Twitter: @BigStakeTrades