"The S&P 500 is currently caught between expectations of monetary easing by the Federal Reserve (Fed) and risks stemming from slowing growth. This has led to more cautious trading until clearer signals emerge. In yesterday's session, the standout was Google (Alphabet), whose stock surged 9.14% after a U.S. court issued a favourable ruling, sparing the company from being forced to break up key business segments."
"This eased investor concerns over legal risks and reinforced confidence in the stability of Google's search-related revenue streams. Meanwhile, Tesla rose 3.81%, supported by expectations that demand for electric vehicles will recover as financing costs decline, and clean energy incentives remain in place. Apple also contributed positively, gaining 1.44%, benefiting from prospects of continued partnership with Google to keep its search engine as the default option on iPhones."
"The sharp rally in mega-cap tech stocks provided strong support to Wall Street's major indices, helping them rebound despite mixed macroeconomic signals. U.S. economic data released this week highlighted a clear divergence. The ISM Manufacturing PMI remained below 50, indicating that the manufacturing sector is still contracting under weak demand. In contrast, the ISM Manufacturing Prices index came in higher than expected, signalling persistent input cost pressures."
"Real yields remain the decisive variable in September. Each time U.S. data points to moderate cooling, expectations for Fed rate cuts rise, directly supporting equity markets. This explains why the S&P 500 reacts strongly to labour market, inflation, and wage growth reports. Conversely, if data comes in stronger than forecast, the "higher-for-longer" narrative could resurface, pushing yields higher and putting pressure on the index."
The S&P 500 is caught between expectations of Federal Reserve monetary easing and risks from slowing economic growth, prompting cautious trading. Mega-cap tech led gains, with Alphabet surging after a favorable court ruling, Tesla rising on hopes of recovering EV demand, and Apple benefiting from its Google search partnership. ISM data showed a manufacturing contraction alongside higher input prices, complicating the policy outlook. Real yields are the decisive variable for September, as cooler data boosts hopes for rate cuts and equities, while stronger-than-expected data revives a higher-for-longer narrative that elevates yields and pressures the index. Valuations remain elevated relative to history.
Read at London Business News | Londonlovesbusiness.com
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