Bargain Hunters Return as Wall Street Awaits Inflation Data, Fed Rate Cuts

The three main Wall Street indexes rose on Monday as investors sought bargains following significant losses during the first week of September, a historically challenging month for equities.

Traders are closely watching this week's inflation reports for insights into potential Federal Reserve rate cuts at its upcoming policy meeting on September 18.

The market is expecting clues from key data, such as the Consumer Price Index (CPI), to gauge the Fed's next move on interest rates, with hopes that easing inflation could prompt a more dovish stance.

Wednesday's CPI report is expected to show August inflation at 2.6% year over year and 0.2% month over month, with producer price data due Thursday.

Meanwhile, Tuesday will feature the first debate between U.S. presidential candidates Kamala Harris and Donald Trump ahead of the November 5 election.

Preliminary data from the New York Stock Exchange (NYSE) show the Dow Jones Industrial Average rose 457.59 points, or 1.13%, to 40,803.00.

The Standard & Poor's 500 Index gained 50.49 points, or 0.93%, to 5,458.91, while the rich-tech Nasdaq Composite gained 121.03 points, or 0.73%, to 16,811.86.

Major mega-cap growth stocks, including the so-called Magnificent Seven, saw a bounce.

Nvidia led the rise with a 3.5% increase, while Tesla was up 2.6%. Alphabet dropped 1.6%, Amazon rose 2.3%, Meta (formerly Facebook) increased 0.9%, Microsoft was up 1%, and Apple edged up 0.04%.

Friday's weaker-than-expected August jobs data fuelled concerns about the Labor market, leading to the Nasdaq's biggest weekly drop since January 2022 and the S&P 500's largest weekly loss since March 2023.

In the U.S. government bond markets, the yield on the 10-year Treasury, which influences mortgage rates and other economy-influencing loans, settled at 3.70%.

The policy-sensitive two-year yield, which closely tracks Federal Reserve interest rate adjustment expectations, closed at 3.68%.

Meanwhile, Bitcoin, the largest digital currency, rebounded on Monday, trading between US$54,595 and US$57,168 before closing at US$56,893 in New York.

With Bitcoin recently closing below US$58,350, the bullish momentum has stalled, shifting the focus to the downside.

Initial support is seen at US$51,800, with further support at US$48,000; a bounce is anticipated from here.

Broadly, the upside should still be considered if an unexpected rebound occurs, though US$71,500 will pose a significant challenge.

Effective risk management and adaptable strategies are essential for navigating market volatility and seizing potential opportunities.

Ethereum mirrored Bitcoin's volatility, trading between US$2,274 and US$2,351 and closing at US$2,343.

For Ethereum to regain bullish momentum and target US$4,000 despite recent volatility, it needs to close above US$2,870, though this currently seems unlikely.

Clearing the US$2,870 level is critical for sustaining the bullish outlook and making further gains.

Support is now seen at around US$1,950–US$1,980; reassessment at this level is suggested.

Given the high volatility, traders should remain cautious, monitor prices closely, and apply effective risk management and adaptable strategies to navigate the market and capitalise on potential opportunities.

Precious metal prices remained volatile, with Spot Gold closing higher at US$2,504 and silver closing at US$28.32.

In the energy sector, Brent crude, the global benchmark, was firmer at $71.80, while the U.S. benchmark, West Texas Intermediate, closed at $68.05.

Meanwhile, the U.S. Dollar Index (DXY) rebounded to 101.60.

Meanwhile, the Eurodollar was 1.1038, and the British pound finished at 1.3176. The Japanese yen ended lower at 143.06, and the Australian dollar was at 0.6660.

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