Risk sentiment is taking a breather after days of a relentless rally, with all major Wall Street indexes trading in negative territory and sharper declines hitting the most speculative assets, such as cryptocurrencies.
Investors are showing early signs of profit-taking after the Nasdaq 100 and S&P 500 surged roughly 50% and 40%, respectively, from their lows in April.
The blackout in economic data due to the U.S. government shutdown hasn’t dented expectations that the Federal Reserve will continue to cut interest rates. Markets continue to price in a 95% chance of a 25-basis-point rate cut at the October 30 meeting.
Volatility is also on the rise, with the VIX up approximately 5%, while only defensive sectors—namely, consumer staples, utilities and healthcare—are avoiding losses.
Small caps are underperforming large caps, with the Russell 2000 down 1.1% in what could be its worst session since mid-August.
Advanced Micro Devices Inc. (NASDAQ:AMD)’s rally continues, rising …