Stocks are eyeing a bid for fresh record highs after Jerome Powell made it crystal clear the Fed is ready to pivot to lowering rates in September.

High inflation and an era of low rates threw cold water on the usual relationship between stocks and bonds. Fixed income typically serves as an offset to declining equity prices, but both asset classes fell in the wake of the pandemic as the Federal Reserve raised rates to battle inflation.

Emerging stocks resumed their advance, led by Chinese tech blue-chips, after Federal Reserve Chairman Jerome Powell signaled that US interest rates would be reduced starting from next month.

The Dow and the S&P 500 inched up in choppy trading on Monday as markets cemented bets on an imminent rate cut by the Federal Reserve and awaited Nvidia results later in the week, while energy stocks were boosted after crude oil prices jumped.

Investors' expectations for aggressive interest-rate cuts by the Federal Reserve have already filtered through to stocks, bonds and currencies. But investors shouldn't feel the need to chase these latest moves,