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Novavax surged over 17% after the FDA approved its COVID-19 vaccine with specific usage limits. Meanwhile, Reddit fell nearly 7% on a Wells Fargo downgrade, citing long-term traffic risks from AI-integrated search changes.
How Are U.S.-China Tensions and Fed Policy Weighing on Sentiment?
China responded sharply to a U.S. warning over Huawei chip usage, accusing the U.S. of derailing trade progress. Beijing threatened retaliatory measures, raising concerns that recent tariff de-escalation could unravel. Trade risk remains a market overhang, especially after the Nasdaq’s 7% rally last week driven by optimism over a temporary tariff deal.
Federal Reserve commentary added another layer of caution. Atlanta Fed President Raphael Bostic signaled support for only one rate cut this year, citing sticky inflation expectations. With Treasury yields already pressuring equities, a slower Fed pivot may dampen sentiment further.
What’s the Market Outlook from Here?
After last week’s strong rally, the Nasdaq’s pullback reflects renewed investor caution. Traders are watching Treasury yields closely, especially the 10-year benchmark, as it influences everything from equity valuations to consumer credit. U.S.-China tensions and further Fed commentary could drive near-term moves. Unless yields ease or trade progress resumes, tech-heavy indexes could stay under pressure.
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