Bond Yields Drop as S&P 500 Loses Almost 1%

The stock market experienced a decline as Apple Inc. dipped below the $3 trillion mark, and other major companies such as Tesla Inc. and Meta Platforms Inc. also saw a decrease in their stock prices. However, Amazon.com Inc. bucked the trend and rallied after releasing positive financial results. Meanwhile, Treasuries rebounded, recovering some of the losses incurred earlier in the week, following a mixed jobs report.

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Friday's data presented a mixed picture for both bullish and bearish investors. While the 187,000 increase in payrolls fell short of estimates, wages exceeded forecasts, and the unemployment rate declined. As the next Federal Reserve decision is 47 days away, market participants remain uncertain about the central bank's next move, but there is a prevailing sentiment that the Fed is approaching the end of its hiking cycle.

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According to swap traders, there is a 40% probability of another quarter-point rate increase by the end of the year, with contracts indicating an expectation of approximately 10 basis points of tightening. Looking ahead to 2024, traders anticipate rate cuts totaling more than 125 basis points.

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During the trading session, the S&P 500 initially recorded a gain of nearly 1%, but it later erased the advance. Apple's stock declined by almost 5% due to concerns about its future outlook and demand projections. Conversely, Amazon's stock surged by over 8% following an optimistic revenue forecast. Meanwhile, Treasury 10-year yields retreated from their highest level since November, and the dollar put an end to a four-day strengthening streak.

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Callie Cox, an investment analyst at eToro, shared her perspective on the market's current situation, emphasizing the importance of exercising caution while respecting the prevailing momentum. She advised investors to seek quality risk opportunities and brace themselves for potential market volatility during what is traditionally a turbulent time of year.

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