Dow Hits New Record as Bond Yields Keep Falling
The Dow closed at its highest level on record to start the week as bond yields continued to fall.
The Dow was up 228 points, or 0.6%, hitting its first record close since Aug. 30. The S&P 500 was up 0.1%. The Nasdaq Composite dropped 0.5%.
The yield on the 2-year Treasury note fell to 3.554%, its lowest closing yield since Sept. 8, 2022, according to Dow Jones Market Data. The 10-year yield was down to 3.622%, its lowest closing yield since June 1, 2023.
The moves for stocks and bonds followed another shift in the debate over the Federal Reserve’s next move on interest rates. Odds of a half-point rate cut jumped to 63% from 50% on Friday, according to the CME FedWatch Tool. Odds of a quarter-point cut were down to 37%.
A week ago, fed-funds futures saw a 70% chance of a quarter-point cut.
Former New York Federal Reserve President William Dudley was the latest commentator to make the case for a half-point rate cut, adding that he thinks the Fed will favor such an aggressive approach.
There wasn’t much economic data today, aside from a better-than-expected update on manufacturing in New York state. Wall Street’s attention will turn to retail sales from the Census Bureau tomorrow, as well as the start of the Fed’s much-discussed September meeting. It’s about to get a lot busier.