Bonds Rally as Economic Worries Fuel Fed-Cut Bets: Markets Wrap

(Bloomberg) — Bonds climbed as concern about the economy losing steam spurred bets the Federal Reserve will have more room to cut rates.

Treasuries extended this month’s rally, with 10-year yields falling to the lowest levels in 2025. Money markets are now fully pricing in two quarter-point reductions by the Fed this year. Those policy easing bets weren’t enough to entice equity traders. That’s after a recent set of disappointing economic data fueled concern about the outlook for corporate profits amid lofty valuations.

“The market still seems more worried about growth than inflation,” said Chris Verrone at Strategas.

The S&P 500 was little changed. The Nasdaq 100 slid 0.2%. The Dow Jones Industrial Average rose 0.4%.

The yield on 10-year Treasuries sank nine basis points to 4.31%. The dollar fell 0.2%. Bitcoin tumbled below $90,000.

There’s growing “suspicion” among investors about the scope for more S&P 500 gains at a time when European and Chinese stocks are outperforming, according to Bank of America Corp. strategist Michael Hartnett.

“The longer it takes and the harder it is for the S&P to get to new highs, the doubts grow,” Hartnett said in an interview on Bloomberg Television.

He has recommended international equities over US peers this year as he expects the Magnificent Seven megacaps to wobble. While he said investors are far from pessimistic about big tech, these stocks are vulnerable to declines if the trade “doesn’t keep working.”

Corporate Highlights:

• Home Depot Inc.’s sales will rise less than expected this year, as the world’s biggest home improvement retailer anticipates consumers will remain cautious on large projects.
• Nvidia Corp., the top provider of chips used in new artificial intelligence computers, is extending a partnership with networking-gear maker Cisco Systems Inc. in a push aimed at making it easier for corporations to deploy AI systems.
• PayPal Holdings Inc. predicted growth in earnings and transaction margins in coming years, as its new leadership continues to streamline the sprawling business.
• Eli Lilly & Co. is ramping up the fight against cheaper, copycat versions of Zepbound by lowering prices for a version of its blockbuster obesity drug.
• Hims & Hers Health Inc. said that it will soon stop selling some compound weight-loss drugs.
• Chegg Inc. is weighing “strategic alternatives” for its business, saying that traffic to its web-based education platform has been decimated following Google’s launch of an artificial intelligence-powered summary tool.
• Zoom Communications Inc. projected slower-than-expected revenue growth for the year, dimming optimism that an expanded suite of products will bring a sales surge.
• Krispy Kreme Inc.’s net revenue forecast disappointed. The company is weighing refranchising some of its businesses in international markets even as it expands its distribution network in the US, Chief Executive Officer Josh Charlesworth said.
• Bank of Montreal and Bank of Nova Scotia kicked off Canadian bank earnings season with strong results from their capital-markets divisions amid an increase in trading activity.
• Unilever Plc pushed out Chief Executive Officer Hein Schumacher after less than two years, signaling that the board wasn’t satisfied with the pace of restructuring at the maker of Hellmann’s mayonnaise and Ben & Jerry’s ice cream.

Key events this week:

• US new home sales, Wednesday
• Nvidia earnings, Wednesday
• Fed’s Raphael Bostic speaks, Wednesday
• Eurozone consumer confidence, Thursday
• US GDP, durable goods, initial jobless claims, Thursday
• Fed’s Jeff Schmid, Beth Hammack, Patrick Harker, Michael Barr, Michelle Bowman speak, Thursday
• Japan Tokyo CPI, industrial production, retail sales, Friday
• US PCE inflation, income and spending, Friday
• Fed’s Austan Goolsbee speaks, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 9:31 a.m. New York time
• The Nasdaq 100 fell 0.2%
• The Dow Jones Industrial Average rose 0.4%
• The Stoxx Europe 600 rose 0.6%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.3% to $1.0501
• The British pound rose 0.3% to $1.2669
• The Japanese yen rose 0.3% to 149.34 per dollar

Cryptocurrencies

• Bitcoin fell 5.6% to $88,718.98
• Ether fell 8.9% to $2,402.85

Bonds

• The yield on 10-year Treasuries declined nine basis points to 4.31%
• Germany’s 10-year yield declined one basis point to 2.46%
• Britain’s 10-year yield declined six basis points to 4.51%

Commodities

• West Texas Intermediate crude fell 0.4% to $70.40 a barrel
• Spot gold fell 0.3% to $2,942.93 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Cecile Gutscher, Sujata Rao, Robert Brand and Aya Wagatsuma.

©2025 Bloomberg L.P.