The S&P 500 Index ($SPX) (SPY) today is up +0.35%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.79%. September E-mini S&P futures (ESU25) are up +0.35%, and September E-mini Nasdaq futures (NQU25) are up +0.76%.
Stocks are climbing today on the prospect of a more accommodative Federal Reserve. The 10-year T-note yield fell to a 5-month low today of 4.04%. The markets have fully priced in a 25 bp rate cut by the Fed at next week's FOMC meeting and priced in a 10% chance for a 50 bp rate cut. However, this week's US Aug CPI and PPI reports will show how much room the Fed has to cut interest rates and support the job market. Stocks fell last Friday after the weaker-than-expected US Aug payroll report sparked concerns that the Fed was falling behind in supporting a rapidly cooling US labor market.
Weaker-than-expected trade news from China is negative for global growth prospects after China's Aug exports rose +4.4% y/y, weaker than expectations of +5.5% y/y. Also, Aug imports rose +1.3% y/y, weaker than expectations of +3.4% y/y.
Market focus this week will be on any trade or tariff news. On Tuesday, the BLS will release annual benchmark revisions to US payrolls in the year through March. On Wednesday, Aug PPI final demand is expected to climb +3.3% y/y, unchanged from July, and Aug PPI ex-food and energy is expected to ease to +3.5% y/y from +3.7% y/y in July. On Thursday, Aug CPI is expected to climb to +2.9% y/y from +2.7% y/y in July, and Aug CPI ex-food and energy is expected to increase +3.1% y/y, unchanged from July. Also, weekly initial unemployment claims are expected to fall by -3,000 to 234,000. On Friday, the University of Michigan Sep consumer sentiment index is expected to slip -0.2 to 58.0.
The markets are now pricing in a 10% chance of a 50 bp rate cut at the upcoming FOMC meeting on Sep 16-17, versus the previous expectations of a zero chance of that 50 bp rate cut. After the fully expected -25 bp rate cut at the Sep 16-17 meeting, the markets are now discounting an 81% chance of a second -25 bp rate cut at the Oct 28-29 meeting, up from a 54% chance as of late Thursday. The markets are now pricing in an overall -76 bp rate cut in the federal funds rate by year-end to 3.62% from the current 4.38% rate.
Regarding tariffs, a federal appeals court ruled late last month that President Trump exceeded his authority by imposing global tariffs without Congressional approval, but the court let the tariffs remain in place while appeals continue. The US Court of Appeals for the Federal Circuit Court said, "The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax." The case now appears to be headed to the Supreme Court for a final decision. According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced.
Overseas stock markets today are higher. The Euro Stoxx 50 is up +0.61%. China's Shanghai Composite closed up +0.38%. Japan's Nikkei Stock 225 rose to a 2.5-week high and closed up +1.45%.
Interest Rates
December 10-year T-notes (ZNZ5) are up by +3 ticks. The 10-year T-note yield is down by -1.3 bp to 4.061%. The 10-year T-note yield dropped to a 5-month low today at 4.044% on carryover support from last Friday's weak US unemployment report that bolstered the outlook for Fed easing. Supply pressures are limiting gains in T-note prices as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with Tuesday's $58 billion auction of 3-year T-notes.
Concerns about Fed independence are negatively impacting T-note prices due to President Trump's attempt to fire Fed Governor Cook and Stephen Miran's intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.
European government bond yields today are moving lower. The 10-year German bund yield fell to a 1-month low of 2.638% and is down -1.8 bp to 2.644%. The 10-year UK gilt yield dropped to a 3-week low of 4.605% and is down -2.5 bp to 4.620%.
Swaps are discounting the chances at 1% for a -25 bp rate cut by the ECB at the September 11 policy meeting.
US Stock Movers
Chip stocks are climbing today to provide support to the overall market. Broadcom (AVGO) is up more than +4% and added to last Friday's +9% surge to lead chip stocks higher and gainers in the S&P 500 on news that the company is teaming up with OpenAI to make artificial intelligence accelerators. Also, Lam Research (LRCX) is up more than +3% after the stock received a 30-day upside catalyst watch at Citigroup. In addition, Marvell Technology (MRVL) is up more than +2%, and Nvidia (NVDA), KLA Corp (KLAC), ASML Holding NV (ASML), ARM Holding NV (ARM), and Microchip Technology (MCHP) are up more than +1%.
AppLovin (APP) is up more than +10% to lead gainers in the Nasdaq 100 after S&P Dow Jones Indices announced the stock will replace Caesars Entertainment in the S&P 500 before the start of trading on September 22.
Rapport Therapeutics (RAPP) is up more than +134% after reporting positive topline results from its RAP-219 treatment for focal onset seizures.
Forward Industries (FORD) is up more than 46% after receiving $1.65 billion in cash and stablecoin commitments for a private investment in public equity offering to fund a Solana-focused digital asset treasury strategy.
EchoStar (SATS) is up more than +15% after SpaceX's Starlink agreed to buy wireless spectrum from the company for about $17 billion.
Robinhood Markets (HOOD) is up more than +14% after S&P Dow Jones Indices announced the stock will replace MarketAxess Holdings in the S&P 500 before the start of trading on September 22.
Premier Inc. (PINC) is up more than +8% after Patient Square Capital was said to be exploring an acquisition of the company.
Oracle (ORCL) is up more than +3% after Morgan Stanley raised its price target on the stock to $246 from $175.
Telecommunication stocks are falling today after SpaceX agreed to buy wireless spectrum from EchoStar for $17 billion. SBA Communications (SBAC) is down more than -4% to lead losers in the S&P 500 and Nasdaq 100. Also, T-Mobile US (TMUS) is down more than -3% and Verizon Communications (VZ) is down more than -2% to lead losers in the Dow Jones Industrials. In addition, AT&T (T) is down more than -1%.
Summit Therapeutics (SMMT) is down more than -21% unveiling new data that cast doubt on the future of its ivonescimab drug to treat lung cancer.
Caesars Entertainment (CZR) is down more than -1% after S&P Dow Jones Indices announced the stock will be replaced by AppLovin in the S&P 500 before the start of trading on September 22.
BXP Inc (BXP) is down more than -1% after cutting its quarterly cash dividend to 70 cents a share from 98 cents.
TransDigm Group (TDG) is down -0.63% after RBC Capital Markets downgraded the stock to sector perform from outperform.
Earnings Reports(9/8/2025)
Casey's General Stores (CASY).
