- Fed’s Collins pencils in second hike this year, then expects rates on hold in 2027
- Nasdaq Composite closes at a record as Meta and chip stocks surge
- Trump proposes USD 5 billion fund to help rebuild Gulf energy sites — WSJ
- St. Louis Fed’s Musalem: Interest rates likely need to rise further to tame inflation
- Meta shares surge more than 10% as Muse excitement triggers a major technical breakout
- BOC’s Macklem: It could take some time for higher fuel margins to normalise
- Expect the News Headlines from Trump and the administration to be fast and furious going into the elections
- Bank of Canada’s Macklem: US tariffs could roughly halve fourth-quarter growth to below 1%
- Yemen President spoke to Trump but Trump made no pledge of military support
- Morning Kickstart: Oil slides as Middle East supply fears ease and risk appetite improves
- investingLive European session wrap: Oil extends fall, Bitcoin jumps to highest since January
The Nasdaq closed at a record on Monday as Meta’s rally helped lift shares of Intel, AMD and Arm. At the same time, oil moved sharply lower. October light crude fell 4.87% to $95.42, while Brent moved above and below $100 and was near $100.05 in the supplied snapshot.
The contrast sums up the session. Investors embraced the AI trade, but a pullback in oil eased some immediate energy inflation concerns. Three Fed officials still argued that inflation could require further action. The dollar was mixed to mostly higher, and Treasury yields fell beyond the short end of the curve.
Foreign exchange was mixed with a tilt to the upside.
The USD gained against the EUR, JPY, GBP, CAD and NZD. It was little changed against the AUD and slipped modestly against the CHF.
The dollar’s largest gain among the currencies shown was against the JPY: USDJPY was near 157.39, up 0.34%. USDCAD was also up 0.34%, near 1.4034. The CHF was strongest against the dollar, although its gain was small.
U.S. Treasury yields see the yield curve flatten
A snap shot of the US debt market yield curve showed:
- 2-year: 4.7505%, up 0.75 basis points
- 5-year: 4.8271%, down 2.49 basis points
- 10-year: 4.9510%, down 4.50 basis points
- 30-year: 5.2803%, down 4.67 basis points
The 2-year yield edged higher, but the rest of the curve moved lower. For a beginner trader, that means the bond market was not treating the Fed’s hawkish comments as a reason to push all yields higher. The drop in oil may have helped temper longer-term inflation concerns, though one day’s price action cannot settle that question.
U.S. stocks: AI shares lead
- Dow Industrial Average: 52,054.19, up 366.04 points (+0.71%)
- S&P 500: 7,764.69, up 114.18 points (+1.49%)
- Nasdaq Composite: 27,122.09, up 599.55 points (+2.26%) to a record close
- Russell 2000: 2,875.3602, up 14.9636 points (+0.52%)
- Nasdaq 100: 30,482.35, up 838.19 points (+2.83%)
Meta’s rally spreads to chips
Meta’s move was the headline, but it was far from the only winner. The chip gains were even larger in some cases:
- Meta: up about 12%, its best day since January 29
- Arm Holdings: $322.90, up 17.16%
- Intel: $121.81, up 12.17%
- AMD: $615.52, up 9.95%. AMD crossed $1 trillion in market value during the session.
Meta’s surge was the standout stock story. Enthusiasm around its Muse AI assistant spread to semiconductor companies that investors see as potential beneficiaries of AI demand, including Intel, AMD and Arm.
It is a reminder to look beneath the index headline. The Nasdaq’s record tells us buyers were in control of that index today, but the particularly strong moves in AI-related shares tell us where much of the excitement was concentrated.
European stocks close higher across the board.
European markets also finished higher helped by the rise in US stocks:
- Germany’s DAX: 25,575.02, up 270.95 points (+1.07%)
- France’s CAC 40: 8,138.95, up 73.92 points (+0.92%)
- U.K.’s FTSE 100: 10,739.02, up 79.88 points (+0.75%)
- Spain’s IBEX 35: 19,724.41, up 210.60 points (+1.08%)
- Italy’s FTSE MIB: 52,371.53, up 826.29 points (+1.60%)
Italy led on a percentage basis, followed by Spain and Germany.
Fed officials are not ready to declare victory
St. Louis Fed President Alberto Musalem said interest rates likely need to rise further to bring inflation under control. He sees both demand and supply pressures and favors earlier, smaller hikes over waiting and potentially needing larger moves later.
Boston Fed President Susan Collins said she had penciled in another hike this year and expects rates to remain on hold in 2027. Chicago Fed President Austan Goolsbee said persistent supply shocks, including energy costs and tariffs, could require higher rates even if the resulting slowdown hurts employment. He also suggested that strong demand, including AI data center investment, could mean the Fed has more work to do.
The question is whether inflation is being driven mainly by supply disruptions or by demand that remains too strong. A sustained drop in oil could help with the first problem. It would do less to resolve the second. The supplied material put the market-implied chance of an October Fed hike at about 55%.
Oil and the Middle East
October light crude fell $4.88, or 4.87%, to $95.42. Brent was down $3.82, or 3.68%, near $100.05 in the snapshot after trading on both sides of the $100 mark.
The decline provided some relief after the recent rise in energy prices tied to the Middle East conflict. Still, Fed officials made clear today that they are concerned about inflation pressures extending beyond oil. Traders will want to see whether crude’s pullback holds and whether disruptions to the region’s energy infrastructure and transport routes continue to threaten supply.
Gold, silver fall but Bitcoin is a big gainer on the day
Gold was near $4,341.84, down 0.81%, while silver was near $65.96, down 0.40%. Gold fell even though longer-term Treasury yields declined, a move that would ordinarily offer it some support. The modestly firmer dollar may have been a headwind, but the supplied prices do not point to a single clear cause.
Bitcoin stood near $86,915, up 7.10%. That was a much larger move than the daily changes across the major currencies and metals, and it came alongside strength in technology shares.
What traders take into Tuesday
The Nasdaq record, the nearly 5% slide in U.S. crude and the Fed’s inflation debate are the three stories to carry forward. Buyers had their shot in AI shares and followed through. Oil’s decline gave inflation watchers some breathing room. The Fed officials’ comments, however, show why one down day in crude is unlikely to end the rate debate.
This article was written by Greg Michalowski at investinglive.com.