US rate hike odds drop below 50% after Fed comments; Morgan Stanley warns of S&P 500 correction

US rate hike expectations for October dropped sharply from near 70% to about 47% after New York Fed President John Williams said there is "no urgency" for another increase, easing bond yields and lifting futures. Long-term Treasury yields retreated from recent highs, with the 10-year down 2 basis points to 5.24% and the 30-year near 5.56%. Tokyo stocks rose 1.7%, while oil prices fell up to 3.5% on signs of recovering Saudi exports. Morgan Stanley warns of a possible 5-10% S&P 500 correction, citing weak market breadth as only 40.8% of stocks trade above their 200-day average. Key US inflation and jobs data due today may influence the Fed's next move.