Wall Street Today | Market Expectations Start to Shift in Direction of Slower Pace of Rate Hikes by Fed

Strategists and traders said a narrative is building within financial markets in which the Fed will likely need to back off aggressive interest rate hikes soon.

Signs of this shift in thinking were evident on Thursday: The policy-sensitive two-year Treasury yield fell to a two-week low. In addition, fed-funds futures pointed to an almost 13% chance that the Fed might surprise markets by delivering only a half-point, or 50-basis-point, rate hike on Nov. 2

The U.S. economy grew in the third quarter but showed signs of a broad slowdown as consumer and business spending faltered under high inflation and rising interest rates. Gross domestic product grew at a 2.6% annual rate in the third quarter after declining in the first half of the year, the Commerce Department said Thursday.

The European Union reached a deal to effectively ban new combustion-engine cars from 2035, a move that will reshape transportation and mark a significant step on the path to reduce carbon emissions.

It's too soon to write off the dollar's dominance as the US rate-hike cycle may not be near its peak. That's the firm conviction of money managers at JPMorgan Asset Management and Fivestar Asset Management even after a gauge of the greenback touched a one-month low on Thursday.