The U.S. economy is seemingly on solid ground, but the Treasury bond market is sounding its most severe recession alarm in decades.
Strong corporate results have helped fuel the S&P 500’s climb to new highs this year, taking the focus away from the Federal Reserve’s tortuous path towards lower interest rates. As earnings season winds down, some investors believe monetary policy will jump back in the driver's seat. With the vast majority having reported, S&P 500 companies were on track to increase fourth-quarter earnings by 10% from the year-earlier period, according to LSEG IBES data, which would be the biggest rise since the first quarter of 2022.
The Nasdaq Composite was on track to close at a record for the first time since 2021. The Nasdaq rose 0.4% to 16,095.70, which would mark its highest close on record. “Today there are no notable economic reports nor any Fed speakers, so focus will remain on AI tech stocks and Treasury yields,” writes Sevens Report Research’s Tom Essaye.