Market Volatility Ahead of Presidential Election and Fed Decision
US stocks experienced a tumultuous session on Monday, kicking off a week filled with high-stakes events, including the presidential election and the Federal Reserve’s policy decision. The S&P 500 slid 0.3%, while the tech-heavy Nasdaq Composite fell by a similar margin. The Dow Jones Industrial Average led the declines, plummeting 250 points, or 0.6%.
Election Jitters
The presidential election, taking place on Tuesday, has investors on edge. The neck-and-neck race between Kamala Harris and Donald Trump has sparked concerns about market volatility. Weekend polls showed Harris gaining ground in Iowa, leading to a recalibration of bets on a Trump victory. The dollar dropped by the most in a month, while Treasury yields retreated, with the 10-year benchmark yield sliding almost 10 basis points to about 4.30%.
Fed Policy Meeting Looms
The Federal Reserve’s two-day policy meeting, set to begin on Wednesday, is also generating significant attention. Despite signs of stubborn inflation and mixed job market signals, Wall Street is convinced that Chair Jerome Powell will announce a 0.25% rate cut on Thursday. The focus has shifted to the Fed’s potential actions at future meetings, with the market now anticipating three fewer rate cuts through the end of 2025 than previously expected.
Oil Prices Surge
Oil prices jumped nearly 3% after OPEC+, a group of major oil producers, decided to delay a planned hike in output by at least a month. The move comes amid escalating Mideast tensions, with Iran warning of a “crushing response” to Israel’s strikes.
Sector Performance
Energy stocks outperformed on Monday, driven by the surge in oil prices. Real Estate and Materials also rose, while Utilities, Financials, and Healthcare dipped. Nvidia stock climbed 2.5% as analysts pointed to rising chip sales and mounting spending on AI infrastructure.
Cryptocurrency Market
Bitcoin fell 1% to hover around $67,800 on Monday, as investors braced for the US presidential election. The cryptocurrency has been viewed as a beneficiary if Donald Trump were to win the White House.
Earnings and Economic Data
This week, investors will be keeping a close eye on earnings reports from Berkshire Hathaway, Cleveland-Cliffs, Constellation Energy, and others. Key economic data, including factory orders and durable goods orders, will also be released.
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