Investors turn cautious with rate cut odds at 84% and key inflation data due Friday
On Monday, Canadian and US equities closed lower as markets were weighed down by Nvidia’s upcoming earnings report and growing expectations for a September rate cut.
The S&P/TSX composite index dropped 163.19 points to 28,169.94, as reported by BNN Bloomberg. Losses in industrial and financial sectors led the decline.
The Canadian dollar traded at 72.28 cents US compared with 72.18 cents US on Friday.
In the US, the Dow Jones Industrial Average fell 349.27 points, or 0.77 percent, to 45,282.47.
The S&P 500 slid 27.59 points, or 0.43 percent, to 6,439.32, while the Nasdaq Composite lost 47.24 points, or 0.22 percent, to 21,449.29, according to CNBC.
Tech stocks offered some support.
Nvidia shares rose about 1 percent after receiving analyst endorsements ahead of its results on Wednesday, which many investors view as a bellwether for artificial intelligence and broader market momentum.
Alphabet advanced 1.2 percent, while Intel shares finished about 1 percent lower despite initial gains after US Commerce Secretary Howard Lutnick revealed the government had taken a 10 percent stake in the company.
White House economic advisor Kevin Hassett said the move was part of a sovereign wealth fund strategy, and US President Donald Trump stated he would make similar deals “all day long.”
As per BNN Bloomberg, health care weighed on Wall Street, with Pfizer down 2.9 percent and Eli Lilly down 2.3 percent.
Railroad stocks also fell after reports that Warren Buffett informed CSX management he was not pursuing a purchase. CSX declined 5.1 percent, Union Pacific lost 2 percent, and Norfolk Southern shed 2.5 percent.
Bond yields moved higher.
The 10-year US Treasury yield rose to 4.28 percent from 4.25 percent Friday, while the 2-year yield increased to 3.73 percent from 3.70 percent.
Traders are pricing an 84 percent chance of a quarter-point cut in September, as per CME Group’s FedWatch tool.
The Federal Reserve outlook remains a key focus.
According to CNBC, Chair Jerome Powell suggested Friday the central bank could begin easing monetary policy next month.
CFRA Research strategist Sam Stovall said much of Friday’s rally was short covering and predicted “restrained gains” until the Fed meeting on September 17.
Anthony Saglimbene, chief market strategist at Ameriprise, said markets are “digesting Friday’s news and kind of the increasing odds that we’re going to see a September rate cut from the Fed,” reported BNN Bloomberg.
Economic data will shape sentiment later this week.
The Conference Board releases US consumer confidence figures Tuesday, and the personal consumption expenditures price index is due Friday.
Economists expect prices rose 2.6 percent in July compared with a year earlier, unchanged from June and slightly above the Fed’s 2 percent target.
Commodities also moved in opposite directions.
October crude oil gained US$1.14 to US$64.80 per barrel, while December gold edged down US$1.00 to US$3,417.50 an ounce, as per BNN Bloomberg.
