Stocks Drop as Investors Get Nervous by Rising Yields – Europe Market Wrap

Wall Street returned after a holiday weekend with increased concerns about bubbly technology stocks and stretched government budgets. Global bonds fell sharply, while gold momentarily reached a record high.

S&P 500 futures sank 0.7%, adding to the tech-driven selloff that ended last week. Nvidia topped the Magnificent Seven’s premarket losses, sliding 1.5%. The Nasdaq 100 fell 0.9%. The Dollar achieved its largest increase since July, putting it on track for its first advance in six days.

The yield on 30-year Treasuries rose five basis points to 4.98%, while UK peers reached their highest since 1998. Britain’s need to cover a rising budget imbalance came into light amid a 10-year debt offering that is projected to raise a record amount.

This year’s record-breaking stock rally has entered a critical stage, with markets waiting to see if predictions on the first Fed rate cut of 2025 will come true this month and if expectations for future easing stay strong. Tariff tensions and concerns that Trump’s attacks on the Fed would exacerbate inflation are adding to the pressure.

Swaps now indicate a 90% chance of a quarter-point Fed rate cut later this month, with three more comparable moves projected by June.