Stocks and bonds both rise on expectations that the Fed will cut interest rates – US Markets Wrap

More evidence of a slowdown in the US labour market bolstered predictions that the Federal Reserve will drop interest rates at its final policy meeting in 2025, sending stocks higher as bond yields fell alongside the currency.

Despite the downturn in most megacaps, over 350 S&P 500 equities climbed. Nvidia’s Jensen Huang is sceptical whether China will accept its H200 processors if the US relaxes restrictions. Microsoft fell on reports of lower demand for some artificial-intelligence tools, but recovered modestly after the company stated aggregate sales quotas for AI products had not been reduced.

Treasuries surged throughout the curve, bringing two-year rates under 3.5%. The greenback saw its worst day since September.
US employers reduced payrolls in November by the largest amount since early 2023, raising concerns about a labour market slowdown. Services activity grew somewhat quicker, although a measure of prices paid fell to a seven-month low.

The S&P 500 finished at 6,850, up for the seventh time in eight sessions. The yield on two-year Treasury notes declined two basis points to 3.48%. The dollar fell 0.3%. Bitcoin hovered around $93,000.