Market Rally Stalls as Traders Temper Fed Cut Bets and Brace for Volatile Week – US Market Wrap

A tech-led stock rebound faded as Wall Street remained cautious ahead of a deluge of economic data and concerns about the Federal Reserve’s ability to cut interest rates in December. Bonds were dropped.

The relief brought about by the end of the US government shutdown gave way to volatility this week, as various Fed speakers lowered expectations for further policy easing. Hot areas popular among momentum traders, such as artificial intelligence, whipsawed. Bitcoin was barely up by 2025. While the S&P 500 almost reversed a 1.4% decline, the majority of its shares fell. Nvidia surged ahead of its earnings.

The prospect of lower interest rates favouring Corporate America, combined with booming AI prospects, has powered a meteoric rise since the April meltdown, prompting many traders to look past high valuations in order to continue chasing the market higher.

Most big tech companies’ earnings have been in line or higher than expected, but the outlook for borrowing costs remains uncertain. As Nvidia prepares to report on Wednesday, options traders anticipate a 6.2% stock swing in either direction – the highest implied move in a year.

Also next week, big box retailers such as Walmart Inc. and Target Corp. will report their results, providing insight into the state of consumer spending, the primary engine of the American economy.

The S&P 500 remained near 6,735 after briefly testing its 50-day moving average. A gauge of megacaps halted a three-day slide. The cost of protecting Oracle Corp.’s debt from default has risen as nervous investors rush to hedge against the billions of dollars the company is pouring into AI.
The yield on 10-year Treasuries increased three basis points to 4.15 percent. The dollar fluctuated. UK markets fell as budget speculation raised concerns about the country’s finances. Oil prices rose as geopolitical risks increased from Russia to Iran.