On Monday, the New York Stock Exchange is set to continue its decline that began on Friday, in the wake of an employment report that sent both the dollar and bond yields back up.

Half an hour before the opening,

On Friday, US equity markets had suffered declines of between 1.5% and 1.6% in the wake of solid employment figures likely to prompt the Fed to take a wait-and-see approach to rate cuts.

Down 5% over the past month, the S&P 500 has now wiped out all the gains that followed Donald Trump's victory in the presidential election on November 5.

In a research note, Goldman Sachs economists say they now expect only two rate cuts from the Federal Reserve this year, compared with three previously.

On the bond market, the yield on 10-year US Treasuries was barely above 4.77% this morning, having reached its highest level since 2023, above 4.78%, on Friday.

The dollar continued to soar against the euro, breaking through the symbolic 1.02 barrier last seen in the autumn of 2022.

Nervousness about the Federal Reserve's updated monetary easing expectations has been compounded by worries about Donald Trump's economic policies.

The President-elect's firm stance on trade issues is the main cause for concern for many investors.

High tariffs on goods imported from China, Mexico, Canada and Europe would increase the price of imported goods for American consumers, an inflationary dynamic that would further reduce the Fed's room for manoeuvre.

Scalded by this difficult start to the year, investors are hoping to be able to count on a solid earnings season to restore some of the optimism that characterized the stock markets last year.

For while Wall Street has been brooding over the past few weeks, US companies are expected to have had a robust 4th quarter in terms of results.

According to FactSet, analysts expect earnings growth for S&P 500 companies to reach 11.7% in the last three months of 2024, the highest in three years.

As usual, the big banks will be in the spotlight in the first week of the earnings season, with Citi, Goldman Sachs, JPMorgan and Wells Fargo scheduled for Wednesday, followed by Bank of America and Morgan Stanley the next day.

Comments from these leading financial institutions will provide investors with interesting reading on the current state of the economy, consumer spending and the economic outlook.

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