Thursday, May 21

Wall Street spent the last 24 hours repricing the path for Fed cuts after a run of labor and inflation signals kept traders focused on growth resilience rather than imminent easing. The S&P 500 finished at 5,412, down 0.3%, while the Nasdaq Composite slipped 0.6% as higher-rate sensitivity again outweighed late-session dip buying in megacap tech. European equities were steadier, with the Stoxx Europe 600 up 0.2%, while Japan’s Nikkei 225 rose 0.4% and China’s CSI 300 added 0.5%, a split that suggested the U.S. rate narrative remained the dominant driver rather than a broad risk-off turn.

Treasuries were firmer at the short end but still reflected a market that is not fully convinced the Fed is done; the 2-year yield fell 5 basis points to 4.28%, while the 10-year eased to 4.46%, keeping the curve steepening bias intact. That move came alongside a softer dollar, with the DXY down 0.3% and the euro back above $1.08, which helped explain why international equities held up better than U.S. growth stocks. The labor backdrop remained the main macro overhang: Nuveen said employment has started to show cracks and investor sentiment remains broadly suppressed, even as equity valuations stay elevated.

In commodities, Brent crude slipped 1.1% to $81.34 a barrel and WTI fell 1.0% to $77.02, easing some of the inflation anxiety that had been building around energy costs. Gold rose 0.7% to $2,425 an ounce as lower real yields and a weaker dollar supported defensive demand. Bitcoin traded near $68,900, up about 2%, a move that tracked the softer dollar and the market’s growing appetite for duration-like assets outside Treasuries.

The next catalyst is Friday’s U.S. PCE inflation report, which matters because consensus still assumes core inflation is cooling enough to keep September cut bets alive; a firmer print would force rates markets to push that timing back and likely pressure tech again.