US technology stocks were lower on Monday as traders pulled back rate cut expectations.
NAS 100 – Daily Chart
The price of NAS 100 has dipped below recent resistance at the 19,955 level. Further weakness could open up a larger correction.
Tech stocks in the US were mildly lower, pressured by higher bond yields, with 10-year yields climbing to a 2-month high after Friday’s stronger-than-expected Sept payroll report. The labour market strength eliminated the market odds for a -50 bp rate cut by the Fed at next month’s FOMC meeting.
The markets will now await consumer price data on Thursday to see if the trend in slowing prices will continue. The consensus is for September’s CPI to ease to +2.3% on an annual basis from +2.5% in August. September’s CPI (ex-food and energy) is expected to remain unchanged from August at +3.2%.
Traders have now discounted the chances at 83% for a -25 bp rate cut at the November 6-7 FOMC meeting and at 0% for a -50 bp rate cut at that meeting.
Middle East tensions have also reduced the appetite for risk assets and are a negative weight on stocks. In addition to Gaza, Israel is waging a ground and air offensive in Lebanon against the Hezbollah group. The Israel Defense Force (IDF) said today that it had deployed a third division of troops in southern Lebanon while maintaining airstrikes in Beirut. The markets are also awaiting Israel’s response to last Tuesday’s missile attack from Iran.
Amazon was -2% lower after Wells Fargo reduced its weighting of the company’s stock to equal weight from overweight. Tesla stock has its important robotaxi event this week but the stock lost ground on Monday, down -3.13%.
