Market Volatility Follows a Historic Rally: Global financial markets show notable
divergence following a powerful rally led by Wall Street in the aftermath of the April crash.

The surge reflects signs of fatigue and growing concern over overvalued equities,
adding to broader worries about market volatility across regions.

This comes amid waning momentum in both U.S. and Asian markets,

despite continued support from a U.S.-China trade truce, major Gulf region deals, and European agreements.
This phase confirms that market volatility follows even the strongest rallies when fundamentals are questioned.

Contents

Rate Cut Expectations

Mixed Market Views

Overbought Signals

Speculators Return

Commodities Performance

Wall Street Falters After a Sharp Climb

Following a 22% jump from April lows, the S&P 500 entered a volatile phase as most major sectors declined,
Except for mega-cap tech companies, which continued to climb.
The “Magnificent Seven” index (Apple, Alphabet, Nvidia, Amazon, Meta, Microsoft, Tesla) rose 1.7%.

The Nasdaq 100 gained 0.6%, boosted by Nvidia, which erased its 2025 losses entirely.
Meanwhile, the Dow Jones Industrial Average fell 0.2%, and the S&P 500 increased 0.1%.

In Asia, stocks fell for the first time in five sessions.
Indices in Japan and Australia, along with U.S. futures, declined.
Mainland China and Hong Kong saw slight drops amid fears that recent gains might be overextended.

Historic Boeing Deal Lifts Stock

In parallel, Boeing shares soared after signing the largest deal in its history with Qatar Airways
to purchase long-range aircraft during President Donald Trump’s visit to Doha—a bright spot on an otherwise subdued trading day.

Caution Persists Despite Trade Truce

The trade truce between the U.S. and China, agreements with the UK, and notable Gulf region deals
helped ease some investor concerns.
China also suspended restrictions on rare earth exports and other military-use tech,
following a temporary 90-day tariff reduction agreement with the U.S.

Still, Mark Hackett of Nationwide warned that the market has “shifted rapidly from oversold to overbought,”
which may hinder further gains without apparent economic acceleration.

Bond Yields Rise, Dollar Holds Steady

U.S. bond markets saw sell-offs on Wednesday,
pushing the 10-year Treasury yield to 4.53% (up seven basis points)—its highest in about a month.
2-year yields also hit their highest level since March.

Bloomberg reported that the U.S. does not plan to include monetary policy pledges in trade agreements,
helping the dollar trim losses.
The Bloomberg Dollar Index remained essentially unchanged.

Rate Cut Expectations Pushed Back

TD Securities joined other Wall Street banks in predicting a delay in Federal Reserve rate cuts.
Swap contracts are no longer priced in two-quarter-point cuts this year.

Austan Goolsbee, President of the Chicago Fed,
emphasized that policymakers shouldn’t react to daily market swings, citing stable economic data.
Vice Chair Philip Jefferson warned that tariffs and associated uncertainty could slow growth and stoke inflation,
but reaffirmed the Fed’s readiness to respond.

Krishna Guha of Evercore noted that Jefferson’s latest remarks leaned more dovish than previous hawkish tones,
signaling ongoing caution even amid U.S.-China easing.

Mixed Market Views

Analysts at Goldman Sachs, led by Peter Oppenheimer, described the rally as “too fast,”
comparing it to “event-driven bear market behavior,”
and warned that upside potential remains limited if weak economic data resurfaces.

Conversely, Rick Gardner of RGA Investments remained optimistic,
calling the tech-led rebound a “structural shift” after months of lackluster performance.
He expects the rally to continue, driven by AI optimism and reduced trade tensions.

Overbought Indicators and Risk of Correction

Matt Maley from Miller Tabak flagged overbought conditions, with the 7-day RSI at its highest since July
and CNN’s Fear & Greed Index nearing “Extreme Greed.” Still,
Craig Johnson of Piper Sandler views moderate pullbacks as buying opportunities,
especially in high-relative-strength sectors.

Speculators Return—Betting on Laggards

In a bold move, trading desks at Citigroup and JPMorganChase began targeting 2025’s biggest losers,
like small caps, tech equipment, and homebuilders—for short-term gains.

Stuart Kaiser from Citi also expressed a preference for weaker-balance-sheet stocks.
With U.S. benchmarks erasing year-to-date losses, investors who missed the earlier
rally are now hunting for entry points before new trade tensions emerge.

Daniel Skelly from Morgan Stanley urged buying dips rather than chasing rallies.
At the same time, David Lefkowitz of UBS Global Wealth Management maintained a neutral but optimistic stance,
expecting the bull market to extend into next year despite potential soft economic data acting as a modest headwind.

Gold Rebounds, Oil Slips

Gold rebounded after a 2.3% drop to a one-month low in the previous session.
Meanwhile, oil prices fell for the second day following a government
report showing the largest crude inventory build in two months.

Market Volatility Follows a Historic Rally

Market Volatility Follows a Historic Rally

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