Tech-Led U.S. Rally, Softer Commodities, and Growing Fed Rate-Cut Bets

Index Update:  U.S. markets rallied on Monday, with the Dow up 0.44%, the S&P 500 up 1.55%, and the Nasdaq jumping 2.69%, driven largely by strong gains in megacap tech stocks. Broadcom surged 11.1% on renewed AI momentum, Alphabet rose 6.3% as Gemini 3 developments boosted its valuation above Microsoft, and Tesla climbed 6.8% after updates on next-gen AI chips. Dovish comments from Federal Reserve officials further lifted sentiment, pushing market expectations for a December 25 bps rate cut to 81%, up from 42.4% a week earlier. Fed Governor Christopher Waller and other policymakers signaled support for easing.

Market Movers:  On Monday, the top gainers were Antelope Enterprise Holdings Limited (+109.09%), followed by ZJK Industrial Co., Ltd. (+40.68%). On the contrary Twin Hospitality Group Inc (-39.44%), and Mobile-health Network Solutions (-38.53%) declined the most the same day.

Commodities Update:  WTI and Brent crude prices retreated on Tuesday, reversing part of Monday’s gains, as progress toward a potential Russia-Ukraine peace deal raised the likelihood of sanctions being eased and additional Russian oil returning to an already oversupplied market. WTI slipped to about $58.5 per barrel and Brent toward $63. Meanwhile, gold edged down to around $4,120 per ounce but remained strong after Monday’s nearly 2% surge, driven by growing expectations of a December U.S. rate cut following dovish remarks from multiple Federal Reserve officials. Markets now see an 81% chance of a 25 bps cut, with investors awaiting key U.S. retail sales, PPI, and jobless claims data for further policy clues.

Macro Updates:  The dollar index hovered around 100 on Tuesday, moving sideways for a fourth session as dovish comments from Federal Reserve officials boosted expectations of a December rate cut. Fed Governor Christopher Waller and other policymakers highlighted rising labor market risks and data delays, reinforcing market pricing of an 81% chance of a 25 bps cut, up from 42.4% a week earlier. The dollar was generally flat to slightly weaker against major currencies as investors awaited key U.S. economic data, including retail sales, PPI, durable goods, and jobless claims.

Bonds Commentary:  The 10-year U.S. Treasury yield slipped to 4.04%, a near one-month low, as dovish comments from key Fed officials reinforced expectations of a 25 bps rate cut in December. Fed Governor Waller, a leading contender for next year’s Fed Chair role, backed a cut due to weakening labor market conditions, echoing recent remarks from New York Fed President Williams. The Fed will make its upcoming decision with limited recent data because of the government shutdown, with key inflation and jobs reports delayed. Available indicators show rising jobless claims and softer labor conditions, though PMI data suggests inflation pressures are picking up, leaving room for debate within the FOMC.

Futures Update:  U.S. stock futures dipped slightly on Tuesday, pressured by weakness in Nvidia as investors awaited key economic data that could influence upcoming Federal Reserve decisions. By early morning, Dow, S&P 500, and Nasdaq 100 futures were all down between 0.1% and 0.2%. This followed a strong rally on Monday, when dovish signals from Fed officials boosted hopes for a December rate cut, lifting the S&P 500 by 1.6%, the Nasdaq by 2.7%—its best day since May 12—and the Dow by 0.4%.

The notable rebound observed during last Friday's session was followed by an even more substantial upward move during Monday's trading. The S&P 500 increased by 102.13 points, or 1.55%, and closed at 6,705.11. From a technical standpoint, the index found support at critical levels and gradually advanced. Nevertheless, a close above the key moving average would be an important milestone to monitor and could indicate some sideways movement in the near term. The 14-day Relative Strength Index (RSI) is recovering from lower levels, supporting a positive outlook. Key support levels are around 6,620, while resistance is expected near 6,820.