Wall Street is ending a strong week on a quieter note, with major stock indexes remaining near record highs. The S&P 500 showed little movement from its recent rally, maintaining its momentum.
Treasury yields were slightly down, cooling off after rising for several weeks. The market's performance is following a series of economic data reports that point to a slowing labor market, which affects expectations for the Federal Reserve's next move.
The major stock indices were mixed as of 11:24 a.m. New York time, with the S&P 500 little changed, the NASDAQ 100 up 0.3% and the Dow Jones Industrial Average down 0.4%.
European markets also did not see much movement, with the Stoxx Europe 600 remaining unchanged, and the MSCI World Index remaining steady. The Bloomberg Magnificent 7 Total Return Index increased 1.2%, while the Russell 2000 Index dropped 0.8%.
In the currency markets, the Bloomberg Dollar Spot Index increased modestly by 0.2%. The euro slipped by 0.1% to $1.1719, while the British pound fell 0.2% to $1.3551. The Japanese yen experienced a 0.4% decline, trading at 147.81 per dollar.
Cryptocurrencies continued to show positive movement. Bitcoin rose 0.6% to $115,170.98, while Ether gained 2.7%, reaching $4,536.87.
In the commodities market, West Texas Intermediate crude oil increased 1.7%, reaching $63.43 per barrel. Spot gold also saw a slight rise, up 0.3% to $3,643.43 per ounce.
Treasury yields moved higher, with the yield on 10-year Treasuries advancing five basis points to 4.07%. Germany’s 10-year yield rose six basis points to 2.71%, while Britain’s 10-year yield increased by six basis points to 4.67%. The yield on 2-year Treasuries was up three basis points to 3.57%, and the yield on 30-year Treasuries rose by four basis points to 4.70%.
According to recent data, US consumer sentiment dropped to its lowest level since May. The University of Michigan’s September survey showed Americans' worries over job security and rising prices.
The data shows a weakening job market, with only 20,000 jobs added last month and weekly jobless claims back up to a nearly four-year high. These signs of a slowing labor market have led investors to expect the Federal Reserve to soon cut rates, with some predicting three cuts by the end of 2025.
Market participants are betting that the Fed will ease monetary policy in response to these developments. Despite inflation concerns, recent data show that inflationary pressures are relatively contained, giving the central bank room to maneuver.
According to CME Group, investors are pricing in a more than 90% chance that the Fed will cut rates by a quarter point during its September meeting.
The decline in consumer sentiment has impacted investor behavior, with many opting for safe-haven assets such as cash. Over the past week, US stocks experienced outflows of $19 billion, while cash inflows totaled $266 billion, according to data from EPFR Global.
Bank of America strategist Michael Hartnett noted that the market's shift toward cash suggests growing caution among investors, but also a potential need for reinvestment into higher-yielding assets as cash returns decline.
The bond market also shows this cautious mood, with treasury yields creeping higher as traders prepare for the Fed’s possible policy changes. Even though inflation concerns stay, experts believe the Fed will find a balance between rate cuts and a careful approach, recognizing the risks of rising prices.
The tech industry has withstood it all, with large companies such as Tesla and Microsoft showing positive movement in their stocks. Tesla shares jumped more than 5%, and they are on track for an 11% rise in a week, a seven-month high. Tesla's strong performance continues to be fueled by optimism around its production and delivery numbers.
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