In a day characterized by mixed trading on US equity indexes, the Nasdaq Composite saw a notable rise of 0.5%, closing at 16,828.6, while the S&P 500 also posted a modest increase of 0.2%, reaching 5,356.1. Earlier in the session, both indexes had experienced downturns. Contrastingly, the Dow Jones Industrial Average faced a slight decline of 0.3%, settling at 39,392.4.
Most sectors were under pressure, with the exception of energy and technology, which showcased resilience in a volatile market environment. In the bond market, most Treasury yields witnessed a decline. The yield on the 10-year Treasury fell by 2.1 basis points, bringing it down to 3.92%. Similarly, the two-year Treasury rate also saw a reduction of 1.3 basis points, standing at 4.04%. Shifting focus to economic indicators, consumer expectations regarding inflation in the US have remained steady, with July statistics reflecting unchanged projections consistent with a 3% growth noted in June, as reported by a survey from the New York Federal Reserve Bank. This week, investors are keenly awaiting the producer price index and consumer price index data to be released on Tuesday and Wednesday, respectively.
These reports are anticipated to provide clarity on the disinflation pathway, especially following the recent nonfarm payroll data, which raised concerns over the Federal Reserve potentially lagging behind in its monetary policy adjustments. A report from Stifel highlighted that while employment gains have clearly decelerated from their previous peaks, the overall labor market metrics continue to indicate stability.
This trend may represent a normalization of conditions rather than signaling an imminent downturn in employment figures. By Monday afternoon, according to the CME Group's FedWatch Tool, the likelihood of a 25 or 50 basis-point interest rate reduction by the Fed on September 18 stood at 55% and 45% respectively. On the commodities front, West Texas Intermediate crude oil prices increased by 2.5%, reaching $78.73 per barrel, reflecting a response to geopolitical tensions and supply concerns.
PVM Oil Associates cautioned about the deteriorating diplomatic relations and military activities in the region, particularly relating to Israel and Iran. They noted that with the recent military posturing by both nations, including the US deploying a missile-laden submarine, caution is warranted as Israel anticipates a potential attack from Iran. In corporate developments, KeyCorp ($KEY) secured a substantial $2.8 billion investment from the Bank of Nova Scotia ($BNS) in exchange for a minority stake.
Following this announcement, KeyCorp's stock surged nearly 11% intraday, making it the top gainer on the S&P 500 index. Additionally, the precious metals market reacted positively, with gold rising 1.1% to $2,499.61 per ounce, while silver advanced 1.3% to $27.95 per ounce, driven by investor demand amidst rising economic uncertainties..