Summary:
US stocks reversed early losses on Monday as investors anticipated Federal Reserve commentary and critical inflation data. The S&P 500 and Nasdaq rose while gold reached record highs on rate-cut expectations – contrasting with a $1.5B crypto liquidation event. Markets await Friday’s Personal Consumption Expenditures (PCE) index release, which could solidify bets on additional Fed rate cuts. Key events include Fed Chair Powell’s speech, Micron/Costco earnings insights on AI demand and consumer spending, and corporate reactions to Trump’s $100k H1-B visa fees.
What This Means for You:
- Position for Fed volatility: Hedge portfolios before Friday’s PCE data – COT reports show institutional traders increasing gold positions as inflation hedge
- Monitor stagflation signals: Bullish gold pricing ($3,750/oz) alongside tech weakness suggests diversifying into defensive assets
- Scrutinize tech labor costs: Microsoft and Goldman’s emergency H1-B memos indicate potential margin pressures – analyze ER call transcripts for cost mitigation strategies
- Prepare for asymmetric risk: CME FedWatch shows 78% probability of October cut, but hotter PCE could trigger VIX spike above 20
Original Post:
US stocks turned higher on Monday as Wall Street looked ahead to a parade of Federal Reserve speakers and a key inflation print for clues to the chances of further US interest rate cuts.
The Dow Jones Industrial Average (^DJI) was roughly flat, while the S&P 500 (^GSPC) rose about 0.2% after the indexes opened in the red. The tech-heavy Nasdaq Composite (^IXIC) added 0.3% on the heels of a strong week for stocks as investors welcomed the Fed’s return to easing.
Gold (GC=F) rose to a fresh all-time high on Monday, topping $3,750 amid bets the Fed will lower rates twice more before the end of 2025. But bitcoin (BTC-USD) and other crypto tokens sank as traders liquidated over $1.5 billion in bullish wagers.
Markets are waiting for Friday’s fresh reading on the Fed’s preferred inflation gauge, the Personal Consumption Expenditures price index, to test those wagers. A weak print is likely to lift the odds of another quarter-point cut in October. Wall Street expects PCE in September to show price pressures are persisting but remain tame enough to keep the Fed on track.
Meanwhile, investors will listen out for any other hints from a packed schedule of Fed speakers in the coming days, including Chair Jerome Powell and Stephen Miran. The newly installed Fed governor has promised to give details on his policy views at his appearance on Monday in New York, while Powell is slated to speak on Tuesday.
Markets were watching for any fallout from Trump’s latest immigration crackdown. On Friday, his administration said US companies will face a $100,000 fee for H1-B work visas, prompting urgent responses from Microsoft (MSFT) and Goldman Sachs (GS).
Eyes will be on Micron Technology (MU) earnings for updates on AI-driven demand and Costco (COST) results for consumer spending insights.
Extra Information:
• Federal Reserve Monetary Policy Reports (Track primary sources of rate decision frameworks)
• CME FedWatch Tool (Real-time rate probability analytics)
• BEA PCE Index Methodology (Official inflation calculation details)
People Also Ask About:
- Why does gold rise when rates drop? Lower rates reduce bond yields, making non-yielding bullion more attractive.
- What caused the crypto liquidation? Margin calls triggered after BTC broke below $58k technical support.
- Why is PCE more important than CPI? Fed considers PCE’s dynamic weightings more accurate for policy decisions.
- How do H1-B fees affect tech stocks? Increases labor costs for firms reliant on foreign STEM talent – impacts margin projections.
Expert Opinion:
“Market reactions reveal dangerous complacency,” warns former Fed economist Claudia Sahm. “Gold at records and crypto collapsing simultaneously suggests conflicting macro bets – investors are underestimating how a single 25bps cut won’t resolve the underlying tension between sticky services inflation and weakening manufacturing data.”
Key Terms:
- Federal Reserve interest rate decision timeline
- PCE inflation report impact on markets
- Gold price correlation with real yields
- Cryptocurrency liquidation cascades
- H1-B visa fee corporate cost analysis
- AI-driven semiconductor demand outlook
- Consumer staples earnings recession signals
ORIGINAL SOURCE:
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