The stock market saw some choppy action amid quarter-end positioning, with Jerome Powell downplaying the odds of a recession while signaling the Federal Reserve could eventually hike for two straight meetings.
(Bloomberg) — The stock market saw some choppy action amid quarter-end positioning, with Jerome Powell downplaying the odds of a recession while signaling the Federal Reserve could eventually hike for two straight meetings.
A mixed performance in the S&P 500’s most-influential group drove trading on Wednesday. Tech giants like Tesla Inc. and Google’s parent Alphabet Inc. climbed. Nvidia Corp. led losses in chipmakers after a report the US is considering new curbs on the exports of artificial-intelligence chips to China.
Swap market bets on further tightening this year barely budged. The dollar climbed. Treasury two-year yields, which are more sensitive to imminent Fed moves, dropped four basis points to 4.7%.
Traders also awaited the results of the Fed’s stress test later Wednesday. While analysts don’t expect any huge negative surprises, a gauge of banks fell. Several executives have recently tempered shareholder expectations regarding dividend increases and stock buybacks — which had been the focus of investors in previous years.
Quarter-End Positioning
Mutual funds bought stocks for the first time since February in the past month as fear of missing out outweighed economic concerns, according to Barclays Plc strategists. Still, this hasn’t changed the bigger year-to-date picture of investors mainly flocking to safe assets, they said.
“Quarter-end positioning could drive volatility through the end of the week,” said Mark Hackett, chief of investment research at Nationwide. “Investors are increasingly pricing in a soft landing. A reacceleration in earnings will be required to drive the next phase of the market move.”
Amid a blistering rally that put the Nasdaq 100 on pace for its best-ever first half of a year, BlackRock Inc. introduced a bullish call on AI.
“A mega force like AI can be a big driver of returns even when the macro environment is not your friend,” said strategists including Jean Boivin, Wei Li and Vivek Paul in the report. “A longer-term investor can look past some of the near-term pain.”
In other corporate news, General Mills Inc. fell after the food producer gave a guidance that suggests price hikes will no longer make up for slowing sales as inflation-weary shoppers cut back on spending. Netflix Inc. gained as Oppenheimer raised its price target.
Elsewhere, oil rose after a US government report showed nationwide stockpiles fell the most in two months, outpacing market expectations.
Key events this week:
- Eurozone economic confidence, consumer confidence, Thursday
- US GDP, initial jobless claims, Thursday
- Atlanta Fed President Rafael Bostic speaks, Thursday
- China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday
- US personal income and spending, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 was little changed as of 12:37 p.m. New York time
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average fell 0.1%
- The MSCI World index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.5% to $1.0911
- The British pound fell 0.8% to $1.2646
- The Japanese yen fell 0.2% to 144.30 per dollar
Cryptocurrencies
- Bitcoin fell 1% to $30,335.64
- Ether fell 1.9% to $1,856.13
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.73%
- Germany’s 10-year yield declined four basis points to 2.32%
- Britain’s 10-year yield declined six basis points to 4.32%
Commodities
- West Texas Intermediate crude rose 2.7% to $69.50 a barrel
- Gold futures fell 0.2% to $1,920 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Tassia Sipahutar, Sujata Rao and Denitsa Tsekova.
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