Investors are speculating whether the Federal Reserve will cut interest rates ahead of the upcoming elections
The Dow pulled back on Monday, pressured by a sharp rise in Treasury bond yields, which surged to their highest levels in two months. Escalating tensions in the Middle East added further uncertainty, contributing to a cautious market sentiment and an increase in oil prices.
Investors are now speculating whether the Federal Reserve will cut interest rates ahead of the upcoming elections, a decision complicated by two key factors: the declining unemployment rate and an inflation report expected later this week.
The CME $CME Group’s FedWatch tool, which measures market expectations for Fed fund rate changes, shows that traders are now pricing in a 91% chance of a quarter-percentage-point rate cut at the Federal Reserve’s next meeting in November.
In the afternoon, the Dow dropped 333 points or 0.79%. Tech-heavy Nasdaq $NDAQ (NDAQ) shed 0.6%, while the S&P 500 (SPGI) dipped 0.5%. Meanwhile, the 10-year Treasury yield, a benchmark for mortgages and car loans, rose above 4% on Monday, reaching its highest level since early August. The 2-year notes also rose five basis points to the 4% level.
Oil prices continued to surge, taking the international benchmark Brent crude closer to $80 per barrel, while the U.S. West Texas Intermediate was over $75, following another round of attacks by Israel on terrorist targets in Lebanon.
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