US Stocks Grind Higher Led by Nvidia’s Climb: Markets Wrap

(Bloomberg) — US stocks drifted higher, erasing earlier losses as swaps traders’ conviction in deep interest-rate cuts this year solidified and a jump in Nvidia’s shares.
The proxy for artificial intelligence ebullience climbed more than 4% after a report that the firm’s chief executive officer was done selling shares — helping propel the S&P 500 Index up 0.2% and the tech-heavy Nasdaq 100 0.5% higher, reversing earlier declines. Swaps traders also increased their wagers to a little over three-quarters of a point of policy easing by year-end after grim data on consumer confidence, suggesting at least one more major rate cut is in store.
The benchmarks initially slipped after the reading on the Conference Board’s gauge of sentiment posted the biggest drop since August 2021, data out Tuesday showed. The report flagged concerns about the labor market. Manufacturing data also came in weaker than expected. 
“The decay in the perceptions of jobs available was striking,” according to Carl Weinberg, chief economist at High Frequency Economics. “It also will deliver a warning message about the state of the economy to financial markets.”
Two-year yields fell to 3.54% after the data which BMO’s Ian Lyngen said was positive for the policy-sensitive maturity.
Still, “unless and until flagging confidence translates into lower consumer spending, the shift in sentiment won’t become a monetary policy influence,” according to Lyngen. 
The report contrasted with the views of  Fed Governor Michelle Bowman, the only policymaker to dissent on last week’s 50-basis point cut. She said the central bank should lower interest rates at a “measured” pace, arguing that inflationary risks remain and that the labor market has not shown significant weakening. 
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A handful of other policymakers, including Chicago Fed President Austan Goolsbee, have said the focus needs to shift from inflation to jobs. Goolsbee said the central bank may need to cut rates “significantly.”
US bond yields were mixed ahead of a $69 billion auction of two-year notes that will test investor demand today.
In individual stock moves, Visa Inc. slumped around 4% after a report that the US Justice Department plans to file a lawsuit over its alleged monopoly on debit cards. Estee Lauder Cos was among equities rallying after China announced a slew of stimulus aimed at shoring up economic growth. The beauty company generates nearly a third of its sales from Asia.
Investors are awaiting data on the Fed’s preferred price metric and US personal spending later this week for further clues on the depth of future reductions.
Elsewhere, the mood was risk-on as equities climbed after China’s slew of stimulus. European stock gauges traded higher as sectors exposed to the Chinese economy rallied. The dollar slumped.
China’s broad package of monetary stimulus on Tuesday included reduced reserve requirements for banks and at least 800 billion yuan ($114 billion) of liquidity support for stocks. A gauge of the nation’s stocks had its best day since July 2020 and the emerging-market equities index added more than than 1%.
Still, Michael Sneyd, head of cross-asset and macro quantitative strategy at BNP Paribas, said it would take time for the economic impact of stimulus to feed through. “That China stimulus news is probably not enough to take off those downside risks in the European economy just yet.”
Oil prices climbed on hopes of a stronger Chinese economy and as a major Israeli strike on Hezbollah targets in Lebanon kept tensions high in the Middle East. Gold hit a record.
Key events this week: 
Some of the main moves in markets: 
Stocks
Currencies
Cryptocurrencies
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Mark Cudmore, Winnie Hsu, Aya Wagatsuma, Margaryta Kirakosian and John Viljoen.
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