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“This is definitely a yield-driven market for now and investors are trying to discount when and how many rate cuts we will see, the timing and the magnitude of rate cuts,” said Bill Merz, head of capital markets research at US Bank Wealth Management in Minneapolis.
“Now we’re probably in a more rational place in terms of yields, and it’s a question of, is the market getting that right and are yields falling for the right reasons or the wrong reasons? And investors have so far taken the view that yields are falling for all the right reasons, that the Fed is navigating what thus far has been a soft landing.”
Apple gained 2.4 per cent after the iPhone maker said its Vision Pro mixed-reality device will be available for sale from February 2 in the United States.
Chipmakers Nvidia and Advanced Micro Devices surged more than 5.5 per cent each. The Philadelphia SE Semiconductor Index was up 3.3 per cent after dropping 5.8 per cent last week, its biggest weekly percentage fall since October 2022.
Meanwhile, Boeing plunged 8 per cent after the plane maker and US regulators gave the go-ahead on Monday for airlines to inspect jets that were grounded after a panel blew off an Alaska Airlines-operated 737 MAX 9 in mid-flight that forced a dramatic landing of the airliner over the weekend.
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The S&P 500 energy index led declines among the 11 S&P 500 sectors, and was last down 1.2 per cent after hitting its lowest level in a month.
On Friday, the benchmark S&P 500 snapped a nine-week streak of gains, as investors dialled back expectations on how aggressive the Federal Reserve would be in cutting interest rates this year following a mixed bag of economic data.
Atlanta Fed President Raphael Bostic said on Monday that the central bank’s dual goals of lowering inflation and maintaining low unemployment are not yet in conflict.
Money markets now see a 69.5 per cent chance of at least a 25-basis-point rate cut as soon as March, according to CME’s FedWatch Tool, down from 88.5 per cent a week ago.
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