Stocks Rise as Treasuries Bounce on Rate Cut Bets: Markets Wrap
(Bloomberg) — Stocks posted modest gains as rising bets on Federal Reserve interest-rate cuts lifted sentiment and spurred a recovery in Treasuries.
S&P 500 and Nasdaq 100 futures climbed 0.2%. Shares in the Magnificent Seven tech giants were mixed in premarket trading, with Tesla Inc. rising 0.4% ahead of a vote on granting Elon Musk a potential $1 trillion pay package.
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Still, caution over lofty tech valuations that weighed on markets earlier in the week continued to linger. Qualcomm Inc., the biggest maker of smartphone chips, became the latest semiconductor firm to issue an upbeat forecast that failed to impress investors, sending its shares down as much as 3.6%.
Meanwhile, Treasuries rebounded after data showed US companies announced the most job cuts for any October in more than two decades. The yield on 10-year notes fell three basis points to 4.13%, while the dollar headed for its biggest drop in three weeks.
Trading this week has been marked by a pullback in the biggest beneficiaries of the artificial-intelligence race, which have powered much of this year’s rally, before dip-buyers stepped in to offer support. Corporate America has continued to deliver robust results, with 81% of the S&P 500 companies reporting this quarter beating earnings expectations.
“You stay sane by trying to stay long-term,” Carmignac fund manager Obe Ejikeme told Bloomberg TV. AI “is a megatrend and will pay off over the next five to ten years, no doubt about that. But staying sane is not putting all your eggs in that basket.”
The Bank of England held interest rates at 4% in a five-to-four vote that laid the groundwork for a December cut. Gilts rose across the curve, with the two-year yield falling three basis points to 3.76%.
Following days of mixed signals from Federal Reserve officials and scant economic data during the longest US government shutdown in history, investors will closely watch a slate of policymaker speeches Thursday for clues on the interest-rate outlook.
Traders have gradually trimmed bets on a quarter-point rate cut next month to around 50% over the past week, before the job-cuts report from outplacement firm Challenger, Gray & Christmas Inc. bumped those odds back up to 60%.
Still, “the overall nudge pressure is up for yields,” wrote Padhraic Garvey and Michiel Tukker at ING. “This, of course, partly reflects the ‘driving in the fog’ metaphor for the government shutdown, but also with a dose of inflation concern and a pinch of risk-on ebullience.”
What Bloomberg Strategists Say…
“The dollar just got a fresh reason to drop as a surge in US layoffs reinforced bets on Federal Reserve easing. With the US government shutdown now the longest on record, alternative data such as the Challenger report are taking on added weight.”
— Nour Al Ali, Macro Markets & Squawk. Click here for the full analysis.
Corporate Highlights:
EchoStar Corp. reported a $16.5 billion impairment charge and agreed to sell more spectrum licenses to Elon Musk’s SpaceX for $2.6 billion as it works to unwind parts of its 5G wireless buildout. Uber Technologies Inc. is in talks on a potential deal with Getir that would help the US company further expand its delivery operations in Turkey, according to people with knowledge of the matter. Arm Holdings Plc rose more than 5% in premarket trading after publishing a bullish revenue forecast, helped by increasing interest in designing chips to run AI data centers. Aquarian Holdings agreed to buy insurer and annuity provider Brighthouse Financial Inc. for $4.1 billion in cash. Snap Inc. shares surged after the company announced a $400 million partnership with Perplexity AI Inc. to incorporate its AI-powered search engine into Snapchat. Shein Group Ltd. has told investors that it’s expecting a bumper $2 billion in net income in 2025, after higher profit margins through price hikes and cost-cutting helped overcome a drop in online traffic caused by US tariffs. Duolingo Inc. shares are sinking after the language-learning software company reported third-quarter results and updates its outlook. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 8:25 a.m. New York time Nasdaq 100 futures rose 0.2% Futures on the Dow Jones Industrial Average were little changed The Stoxx Europe 600 fell 0.1% The MSCI World Index rose 0.2% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.3% to $1.1532 The British pound rose 0.4% to $1.3096 The Japanese yen rose 0.3% to 153.60 per dollar Cryptocurrencies
Bitcoin fell 0.2% to $103,423.76 Ether fell 1.5% to $3,391.1 Bonds
The yield on 10-year Treasuries declined three basis points to 4.13% Germany’s 10-year yield was little changed at 2.67% Britain’s 10-year yield declined two basis points to 4.44% Commodities
West Texas Intermediate crude rose 0.6% to $59.97 a barrel Spot gold rose 0.9% to $4,014.81 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Subrat Patnaik, James Hirai, Neil Campling, Kwaku Gyasi and Eleanor Thornber.
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