Market sentiment shifted on Monday as investors reassessed their expectations for interest rate cuts following a robust jobs report. The Dow Jones Industrial Average retreated 0.3% from its recent record high, while the S&P 500 and Nasdaq Composite fell 0.2% and 0.4%, respectively. The likelihood of a 0.50% rate cut in November has dwindled, with traders now pricing in an 88% chance of a 0.25% move. This shift in expectations could weigh on stocks, which had rallied on hopes of aggressive rate cuts and a soft economic landing.
All eyes are now on the upcoming October consumer inflation report, due Thursday, which will provide insight into the Federal Reserve’s progress in bringing price pressures down to its 2% target. The start of third-quarter earnings season is also on the horizon, with Goldman Sachs raising its target for the S&P 500 on expectations of higher margin growth for corporate companies.
In the energy sector, oil prices continued their upward trend, driven by concerns over potential disruptions to Iran’s oil infrastructure following last week’s missile strike. West Texas Intermediate futures advanced 2% to trade above $76 per barrel, while Brent crude futures rose 2% to trade above $79 per barrel.
Among individual stocks, Nvidia rose 1% to trade above $126 per share, while Amazon fell 2% after Wells Fargo downgraded the stock due to concerns over moderating advertising revenue. Pfizer, meanwhile, saw its stock rise 2.6% premarket on news that activist investor Starboard Value has taken a $1 billion stake in the pharmaceutical giant.
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