The global stock index is falling, bond yields are rising due to declining hopes for interest rate cuts

The MSCI global stock index lost ground on Friday and Wall Street had a subdued end to the week, while US Treasury yields rose after hawkish Federal Reserve officials abandoned hopes of a December rate cut. After opening lower, the S&P 500 pared most of its losses with some help from bargain hunters after major bourses from Tokyo to Paris closed sharply lower, while fresh concerns about the upcoming British budget added to the pain in British markets.

Citing inflation concerns and signs of relative stability in the labor market after two U.S. rate cuts this year, a growing number of Fed policymakers have signaled reluctance to further easing.On Friday morning, Kansas City Federal Reserve President Jeffrey Schmid pointed to concerns that “too hot” inflation goes far beyond the limited effects of rates alone, signaling a possible fallout in December if policymakers choose to cut rates.

In the afternoon, Dallas Federal Reserve President Lorie Logan signaled her opposition to a December rate cut after already opposing the Fed’s October cut on the grounds that inflation is too high.

After 43 days without official data due to a record-long U.S. government shutdown, traders responded to central bankers’ comments by estimating a roughly 46% chance of a quarter-point cut next month, up from 66.9% last week, according to CME Group’s FedWatch tool. Still, the tech-focused Nasdaq clawed its way back from losses to close slightly higher as investors set aside some of their concerns about the high valuations of tech stocks. “The rest of the world was weak as they followed the US market’s lead on Thursday,” said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management, but he noted that Wall Street was buoyed by “a bid for stocks that have led the decline in recent days.”

“People have been conditioned to buy the dip. It’s been a great strategy. And you’re at a time of year where the winners keep winning. That’s why the stocks that are working today have been the winners since the April low,” he said.

For example, AI chip leader Nvidia finished 1.8% higher, while the smaller S&P 600 technology index shook off earlier losses to close down 0.3%.

What probably increased the nervousness is the busy schedule for the coming week, including Nvidia’s quarterly results.

and major retailers, which will shed light on consumer health and AI demand.

“There are so many opposing currents in the market that it can be difficult to determine which way things are going. Is the U.S. economy strong or weak? The answer is: both. Is inflation going higher or lower? Are valuations high or low?” says Viktor Shvets, head of global agency strategy at Macquarie Capital.

On Wall Street, the Dow Jones Industrial Average fell 309.74 points, or 0.65%, to 47,147.48, but posted a 0.3% gain this week. The S&P 500 fell 3.38 points, or 0.05%, to 6,734.11, for a weekly gain of 0.1%, and the Nasdaq Composite rose 30.23 points, or 0.13%, to 22,900.59, for a loss of about 0.5% for the week.

The MSCI index of shares around the world fell 4.37 points, or 0.44%, to 995.79, which would give a gain of around 0.4% for the week.

Previously, the pan-European STOXX 600 index and the broad European FTSEurofirst 300 index were both down about 1%.

Before Wall Street opened, MSCI’s broadest index of Asian shares outside Japan was down 1.5%.

U.S. Treasury yields moved higher after falling earlier in the day. The yield on U.S. 10-year benchmark bonds rose 3.5 basis points to 4.146%, up from 4.111% late Thursday. The yield on 2-year Treasury notes, which typically tracks with Federal Reserve interest rate expectations, rose 1.9 basis points to 3.608%, up from 3.589% late Thursday.

In currencies, the dollar gained against the euro and remained roughly flat against the yen as stocks recovered somewhat and traders weighed the Fed’s next moves.

The dollar index, which measures the greenback against a basket of currencies including the yen and euro, rose 0.02% to 99.26, while the euro fell 0.08% to $1.1622.

The Japanese yen strengthened 0.02% against the dollar to 154.55 per dollar.

Sterling weakened 0.14% to $1.3171 after a report said Finance Minister Rachel Reeves scrapped plans to raise income tax rates in the upcoming budget, raising questions about plans to balance government finances.

In cryptocurrencies, bitcoin fell 3.93% to $94,920.96. Ethereum fell 0.49% to $3,164.35.

Oil prices rose more than $1 on supply fears after the Black Sea port of Novorossiisk halted oil exports following a Ukrainian drone attack on an oil depot in the major Russian energy hub.

U.S. crude rose 2.39%, or $1.40, to $60.09 a barrel, and Brent fell $64.39 a barrel, up 2.19%, or $1.38, on the day.

Gold prices lost ground after the aggressive comments from Fed officials. Spot gold fell 2.12% to $4,082.76 an ounce. U.S. gold futures fell 2.4% to $4,086.50 an ounce.