Stocks & Bonds Drop as Fed Cut Bets Pull Back – US Market Wrap

Stocks and bonds fell as data showing US business activity accelerating amid an increase in inflation fueled speculation that the Federal Reserve will remain on hold.

The S&P 500 fell below 5,300, with all megacaps falling except Nvidia. The giant chipmaker surged more than 9% on a positive outlook, surpassing the historic $1,000 mark. The Dow Jones Industrial Average fell 1.5%, led by a drop in Boeing, which said it will continue to burn cash this quarter and throughout the year. Treasury yields rose, led by shorter maturities.

Swaps now fully price in a full quarter-point rate cut in December, compared to November a day ago. This month saw the fastest growth in service provider activity in a year, while manufacturing output increased at a faster rate. Such resilience makes it difficult for inflation to cool, which explains why the Fed intends to keep interest rates higher for longer.

Treasury two-year yields rose six basis points, to 4.93%. The dollar edged higher. Bitcoin fell more than 4%. Oil and gold have retreated.