Bonds & Stocks
Stocks continued to push away from their all-time highs as traders sifted through the latest batch of corporate earnings and awaited more clues on the Federal Reserve outlook. Another round of better-than-estimated company profits failed to dispel uncertainties about monetary policy, with bets on imminent rate cuts dissipating. While this week's economic calendar will be light, investors will be focused on remarks from a slew of Fed speakers. Wall Street is also eagerly awaiting Nvidia Corp.'s earnings due Wednesday for confirmation that the stock can meet sky-high expectations set by the boom in artificial intelligence.
Economy
Investors are beginning to war-game how the Federal Reserve can manage a US economy that just won't land, with some even debating whether interest-rate hikes will be needed only weeks after a steady run of reductions appeared all but certain. Bets on lower rates coming soon were so prevalent a few weeks ago that Fed Chair Jerome Powell publicly cautioned that policymakers were unlikely to be in position to cut as of March. Less than three weeks later, traders have not only removed March as a possibility but May also looks improbably, and even conviction about the June Fed meeting is wavering, swaps trading shows.
World
China ramped up support for the troubled property sector with its biggest-ever cut to a key mortgage reference rate. But it was met with a muted response from investors, raising expectations that more aggressive measures to support the economy will be needed in the months to come. Chinese lenders slashed their five-year loan prime rate by 25 basis points to 3.95%, the People's Bank of China announced Tuesday. It was the first cut since June and the largest reduction since a revamp of the rate was rolled out in 2019. Still, the move failed to impress investors. China's benchmark CSI 300 Index ended 0.2% higher in what was largely a listless session.