Last week, the Federal Reserve kicked off its rate-cut cycle with a bold 50 bps reduction, signaling that monetary policy had grown too restrictive given the progress on inflation and the normalization of the job market.

US large-cap indexes moved to record highs as investors celebrated the kick-off to what many expect to be a prolonged Fed rate-cutting cycle. The rally was also relatively broad, with the smaller-cap indexes outperforming (+9% on the week for the Russell 2000 index), although they remained below previous peaks. The initial reaction to the Fed’s jumbo rate cut was relatively muted. Indeed, investors’ celebration of the news seemed to begin on Thursday morning, with the Dow Jones Industrial Average, S&P 500 Index, and Nasdaq Composite all surging to new highs. The week’s economic data arguably had an upbeat overall tone, leading critics of the Fed’s decision to argue that policymakers had moved too decisively.

Here's a summary of the Federal Reserve’s decision: 1. Interest rates cut by 50 bps for first time since 2020 2. Rate cuts 2 more 25 basis point in 2024 3. Fed governor Miki Bowman dissented in favour of a smaller 25 bps cut. It's the first dissent by a "governor" since 2005 4. Gained "greater confidence" that inflation is moving to 2% 5. Have an evolving outlook as "carefully assess incoming data" 6. Rate cuts of 100 bps in 2025 and 50 bps of cuts in 2026

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This week, all eyes are on the Federal Reserve as they prepare to potentially initiate their first rate cut after a prolonged period of holding rates at peak levels. With a near 50/50 split in market expectations for either a 25 or 50 bps cut, this decision could set the tone for the economic outlook moving forward.

Stocks managed to post solid gains and largely recovered from the previous week’s steep losses. Growth stocks outpaced value shares by a wide margin, helped by strong performance from technology stocks which rallied aggressively higher midweek after NVDA CEO Jensen Huang said "demand was incredible“. They extended that sudden squeeze into Friday. On Wednesday, stocks initially headed sharply lower following news that core (less food and energy) consumer inflation rose to 0.3% in August, a tick higher than consensus expectations. Meanwhile, headline inflation showed an annual increase of 2.5%, well below July’s increase of 2.9% and its lowest level since early 2021.

Nvidia’s record $280 billion loss led a sharp decline in the Nasdaq’s “Magnificent 7” amid a slowing U.S. job market and potential market turbulence before the election. Each week, the Syz investment team takes you through the last seven days in seven charts.

A string of disappointing labor market data last week spooked investors, pushing them toward bonds. The U.S. yield curve is now positive, while the 10-year Treasury yield has hit a one-year low.

Worries over an economic slowdown appeared to weigh on sentiment as the S&P 500 recorded its worst weekly performance since March 2023 . Tech shares led the declines, driven in part by a drop in NVIDIA following rumors that it may be the subject of a Justice Department antitrust investigation, which led to a roughly USD 300 billion drop in the chip giant’s market capitalization. Energy shares were also especially weak on the back of a decline in oil prices. Conversely, the typically defensive utilities, consumer staples, and real estate sectors held up better. US economic data generally surprised on the downside, raising fears that the Federal Reserve had waited too long to ease monetary policy.

Nvidia shares tumble despite stellar results, a new trillionaire rises, and equity markets brace for their two worst months. Each week, the Syz investment team takes you through the last seven days in seven charts.