Stocks hovered below this week’s record levels as dialed-down bets for U.S. Federal Reserve policy easing prompted a pull-back from riskier assets.

U.S. futures contracts were little changed after Wall Street slipped back from all-time highs in the previous session, while Europe’s benchmark index declined. A gauge of the U.S. dollar edged higher and Treasury yields advanced.

Reddit Inc. shares surged in premarket trading after announcing a content partnership with OpenAI. In Europe, luxury group Richemont rallied after naming Nicolas Bos as chief executive officer in a management shake-up. 

Meanwhile, the meme-craze took another twist as GameStop Corp. and AMC Entertainment Holdings Inc. both erased early gains, putting the stocks on track to extend their US$7 billion-plunge of the past two days.

Friday’s general caution reflected a repricing of U.S. rate cut expectations to only one reduction in 2024 after policymakers said it may take longer for inflation to reach the two per cent target. Investors will be tracking comments later today from the Fed’s Christopher Waller, Neel Kashkari and Mary Daly for further clues about the policy path.

“The markets are now at a bit of a crossroads,” said Stuart Cole, head macro economist at Equiti Capital. “With the central banks all very much in a data-dependence mode, the markets will be also adjusting expectations to each piece of relevant data that comes out.”

Meanwhile, BlackRock Inc.’s Rick Rieder said lower rates could help to temper inflation, arguing that wealthy Americans are earning more than they have in years from fixed-income investments. 

Middle- to higher-income Americans “are getting a big benefit from these interest rates,” he said. “We’re moving to a service-oriented economy, more money is being spent on services, but actually what’s happening — because goods prices have come down so much — it’s allowing for disposable income to go into services.” 

Softer macroeconomic conditions will allow long-duration bonds to stage a comeback, according to Bank of America Corp. strategists. 

Positioning in markets, monetary policy moves and risks to corporate profits are setting the scene for a reversal of the “anything but bonds” trade in the second-half, a team led by Michael Hartnett wrote in a note. Yields for 30-year Treasuries reached this year’s high in late April.

In China, an index of developer shares surged nearly 10 per cent on the announcement of relaxed mortgage rules. Xi Jinping also urged local governments to buy unsold homes as part of measures to rescue the country’s beleaguered property market.

Commodities broadly traded higher. Oil headed for a modest weekly gain as competing drivers for supply and demand were largely offset against each other. 

Nickel jumped as unrest in New Caledonia, the third-biggest producer, raised concerns about disruption to supplies. A record squeeze in the New York copper market began to ease.

Key events this week:

• U.S. Conf. Board leading index, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 7:47 a.m. New York time
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 fell 0.4 per cent
• The MSCI World Index fell 0.1 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.2 per cent
• The euro fell 0.2 per cent to $1.0844
• The British pound fell 0.1 per cent to $1.2655
• The Japanese yen fell 0.3 per cent to 155.88 per dollar

Cryptocurrencies

• Bitcoin rose 1.6 per cent to $66,308.32
• Ether rose 3.3 per cent to $3,033.98

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.40 per cent
• Germany’s 10-year yield advanced five basis points to 2.51 per cent
• Britain’s 10-year yield advanced four basis points to 4.12 per cent

Commodities

• West Texas Intermediate crude fell 0.2 per cent to $79.08 a barrel
• Spot gold rose 0.4 per cent to $2,387.20 an ounce

This story was produced with the assistance of Bloomberg Automation.