US Equities and Treasuries Edge Higher After Delayed Rate Cut Expectations: Bloomberg

US Equities and Treasuries Edge Higher After Rate-Cut Delay

Investors are keeping a close eye on the market after US equity futures and Treasuries edged higher on Friday following a delay in the Federal Reserve’s first interest rate cut. The delay, which is now expected to happen in December, triggered a slight uptick in market sentiment.

Contracts for the S&P 500 and the Nasdaq 100 indexes rose about 0.3%, with premarket gains seen in tech stocks such as Micron Technology Inc., Microchip Technology Inc., and Advanced Micro Devices Inc. These companies are benefiting from bullish sentiment around artificial intelligence following Nvidia Corp.’s strong earnings report.

However, the market mood turned more somber after stronger-than-expected US business activity data forced traders to push back rate-cut expectations by a month. This change has put Bloomberg’s dollar index on track for its biggest weekly gain since early April, with Treasury two-year yields trading just off three-week highs.

Despite these fluctuations, profits at larger US companies remain resilient, offering encouragement to equity bulls. Some strategists are warning that the rally may be at risk of overheating, but overall, the market is still holding steady.

Investors are also cautious ahead of the long weekend in the US and UK, as well as concerns about a shift to a faster settlement cycle in the US that could trigger some failed trades.

In commodities, oil prices are holding near their lowest levels in over three months, with concerns over demand heading into the Memorial Day weekend, which marks the start of the US summer driving season.

Overall, the market continues to see movement based on economic data and rate-cut expectations, making it an interesting time for investors to keep a close watch on their portfolios.