Stocks extend rally as Fed easing optimism builds: Markets Wrap

by Andre Janse van Vuuren 

A rally in global stocks persisted as mounting expectations for Federal Reserve interest rate cuts stoked risk-on sentiment and drove bond yields lower. 

The S&P 500 looked set to build on Tuesday’s record close, with futures for the benchmark up 0.2%. Europe’s Stoxx 600 index rose 0.4% in a second session of gains. All members of the Magnificent Seven tech megacaps climbed in US premarket trading. The MSCI All Country World Index advanced 0.3% to a fresh all-time high. 

Bonds rose in most markets. US Treasuries climbed across the curve, with the yield on 10-year notes dropping three basis points to 4.25%. The dollar retreated 0.4%. 

Equity markets are swept up in a risk-on rally as a so-far modest rise in US goods prices has tempered fears over the impact of tariffs. The data has bolstered bets that the Fed will resume rate cuts next month and act more aggressively to shield a labor market showing signs of strain. 

US stocks hit fresh records 

Optimism over a softening rate stance is further buoyed by easing global trade tensions and a significantly stronger-than-expected US earnings season. 

“The bull case remains a convincing one, with earnings growth solid, and a cooler tone on trade continuing to prevail, all the while dovish policy expectations help to provide a cushion against any worries that the economy may be softening under the surface,” said Michael Brown, senior research strategist at Pepperstone. 

Swaps are pricing in about a 90% chance of a quarter-point cut in September, with at least three more similar moves expected by June. US Treasury Secretary Scott Bessent told Fox Business that “the real thing now to think about is should we get a 50 basis-point rate cut in September.” 

US equities have staged an astonishing rebound from their April lows, when Donald Trump’s tariffs upended markets. The S&P 500 is closing in on a 10% advance for the year, with most of the fresh gains coming in the past two months. 

The volatility that has defined much of this year’s trading has eased, with the Cboe Volatility Index — Wall Street’s fear gauge — falling to its lowest level since December. Treasury market swings have also subsided, as the ICE BofA MOVE Index, a measure of expected yield fluctuations, dropped to its lowest since January 2022. 

“I don’t think the market is being irrational at this point in time,” Bernie Ahkong, CIO at UBS O’Connor Global Multi Strategy Alpha told Bloomberg TV. “We can go much further before the market gets irrational.” 

Corporate News: 

• Vestas Wind Systems A/S maintained its full-year earnings guidance as the company continues its effort to boost profitability and manage the impact of tariffs and shifting energy policy in the US. 
• Private equity firm Advent International has struck an agreement to acquire Sapiens International Corp., an Israeli software provider to the insurance industry, for about $2.5 billion. 
• Elon Musk must face claims by OpenAI that his attacks on the startup in court and in the media amount to a “years-long harassment campaign,” a federal judge ruled. 
• CoreWeave Inc. shares fell 10% after it delivered a disappointing earnings outlook, reflecting margin pressures from a rapid AI datacenter expansion. 
• Air Canada’s more than 10,000 flight attendants said they’ll strike for three days beginning Saturday after rejecting a sweetened offer from the airline and declining arbitration. 
• Carlyle Group Inc. is close to selling HSO to Bain Capital in a deal valuing the Dutch technology services company at about $1 billion, according to people with knowledge of the matter. 

Some of the main moves in markets: 

Stocks 

• The Stoxx Europe 600 rose 0.4% as of 10:24 a.m. London time 
• S&P 500 futures rose 0.2% 
• Nasdaq 100 futures rose 0.2% 
• Futures on the Dow Jones Industrial Average rose 0.2% 
• The MSCI Asia Pacific Index rose 1.6% 
• The MSCI Emerging Markets Index rose 1.7% 

Currencies 

• The Bloomberg Dollar Spot Index fell 0.4% 
• The euro rose 0.4% to $1.1727 
• The Japanese yen rose 0.4% to 147.21 per dollar 
• The offshore yuan rose 0.1% to 7.1776 per dollar 
• The British pound rose 0.5% to $1.3570 

Cryptocurrencies 

• Bitcoin fell 0.2% to $119,915.31 
• Ether rose 0.5% to $4,642.94 

Bonds 

• The yield on 10-year Treasuries declined three basis points to 4.25% 
• Germany’s 10-year yield declined five basis points to 2.70% 
• Britain’s 10-year yield declined three basis points to 4.60% 

Commodities 

• Brent crude fell 0.3% to $65.94 a barrel 
• Spot gold rose 0.4% to $3,361.76 an ounce 

This story was produced with the assistance of Bloomberg Automation. 

© 2025 Bloomberg L.P.