Market Watch: Tech Stocks and Fed Anticipations Impact Global Markets

Tech stocks saw declines as U.S. indexes reacted to expectations of potential Federal Reserve rate cuts. Anticipation is high for the Fed meeting, with possible interest rate reductions that aim to ensure economic stability. Nvidia, Apple, and Amazon faced dips, while lower Treasury yields influenced currency strengths and commodity prices.

Tech stocks dragged on U.S. indexes and the dollar touched a more than one-year low against the yen on Monday, with all eyes set on a Federal Reserve meeting this week set to launch a highly anticipated easing cycle.

Growing expectations suggest the Federal Reserve might cut interest rates by up to half a point to maintain economic stability amid slowing job growth and moderating inflation. Rate-sensitive tech stocks dropped, pulling down the Nasdaq Composite. Nvidia and Apple both fell over 2%, while Amazon.com declined nearly 1%.

The S&P 500 fluctuated, maintaining both positive and negative territory during early afternoon trading. Conversely, the Dow Jones Industrial Average reached an intraday record high. Kathleen Brooks from XTB emphasized that the market's reaction will depend on the Fed's explanation for any rate cut. The dollar index dropped 0.29% to 100.73, and the dollar weakened 0.14% against the yen to 140.62.

Investors also processed news of another assassination attempt on Trump. Shares in his Media & Technology company fell over 3% after an initial rise. Upcoming changes in Trump Media share restrictions could impact stock performance. The Dow climbed 0.44% to 41,575.17; the S&P 500 edged up 0.02% to 5,627.40; and the Nasdaq Composite fell 0.61% to 17,575.83.

The S&P last week recorded its strongest performance of the year. Investor optimism extends beyond U.S. borders, reflected by a 0.12% rise in MSCI's All-World index. Short-dated U.S. Treasury yields hit a two-year low, signaling market expectation for rate cuts. Benchmark 10-year yields fell for a second session, down 3.1 basis points at 3.618%. Traders now see a 59% probability of a half-point cut by the Fed.

Central banks in Japan and the UK meet this week, with both expected to maintain current rates, while U.S. retail sales and industrial production data await interpretation. The Bank of England is likely to hold rates at 5.00%, with a 31% chance of another cut. The Bank of Japan is poised to stay steady but may hint at tightening in October.

Decreasing Treasury yields bolstered the yen against the dollar, while the euro remained higher, buoyed by expected ECB rate cuts. Commodities also responded; gold rose 0.22% to $2,582.08 per ounce, and oil prices increased due to Hurricane Francine's impact on Gulf of Mexico production. U.S. crude rose 2.51% to $70.37 per barrel and Brent climbed 1.9% to $72.97 per barrel. (Additional reporting by Wayne Cole in Sydney; Editing by Sharon Singleton, William Maclean, Ros Russell, and Leslie Adler)

(With inputs from agencies.)