The stock market kept its bullish momentum as traders geared up for a pause in one of the Federal Reserve’s most-aggressive tightening campaigns in decades.
(Bloomberg) — The stock market kept its bullish momentum as traders geared up for a pause in one of the Federal Reserve’s most-aggressive tightening campaigns in decades.
Big tech led equity gains, with the Nasdaq 100 up almost 2% and the S&P 500 topping its closely watched 4,325 mark. Both gauges closed at the highest levels since April 2022. Tesla Inc. climbed for a 12th straight session — a record winning run — and Apple Inc. hit an all-time high. KeyCorp and Citizens Financial Group Inc. led losses in banks after disappointing updates at an industry conference.
In late trading, Oracle Corp. gained as its sales beat estimates, signaling the software maker’s cloud business is benefiting from demand for artificial intelligence workloads.
Treasury two-year yields, which are more sensitive to imminent central bank moves, edged lower. The Bloomberg Dollar Spot Index was little changed. Another slide in oil reduced concern about inflation.
In the run-up to the US central bank decision, Tuesday’s consumer price index will be key for market sentiment. A likely “subdued print” would support bets on the Fed holding rates steady on Wednesday, said Anna Wong at Bloomberg Economics.
To David Kelly, chief global strategist at J.P. Morgan Asset Management, the Fed should weigh progress on inflation against the risk of recession in its June meeting.
“The numbers just won’t support any further tightening, and this will become clearer in the next few weeks,” Kelly said. “If so, the investment environment could support lower long-term interest rates, a lower dollar and further gains in stock prices.”
The Federal Open Market Committee will keep rates at the 5%-5.25% range in June — though officials face a closer call on what to do in July, according to economists surveyed by Bloomberg. Swaps show an almost quarter-point of additional tightening currently priced in by next month’s meeting.
‘Hawkish Skip’
A “hawkish skip” would only buy the Fed a little bit of time, according to Neil Dutta at Renaissance Macro Research.
“If the Fed decides to skip the June meeting, as I anticipate, I don’t think they have a choice but to sound hawkish given their data-dependent pledge,” Dutta added.
Prospects for a pause in rate hikes helped the S&P 500 enter a bull market last week, with the gauge surging over 20% from its October low. Wall Street’s top strategists are split on the way forward.
Goldman Sachs Group Inc.’s David Kostin expects the gains to continue as other sectors catch up with the searing rally for technology shares. Morgan Stanley’s Michael Wilson, meanwhile, points instead to the bear market of the 1940s, when the S&P 500 rallied 24% before returning to a new low.
In other corporate news, Advanced Micro Devices Inc. rallied as multiple analysts raised their price targets on the chipmaker. Amazon.com Inc. gained after Bank of America Corp. cited an improved margin picture. A trio of cruise-line operators jumped as BofA and JPMorgan Chase & Co. signaled increasing confidence in demand. Nasdaq Inc. tumbled after agreeing to buy financial-software maker Adenza from its private equity owners.
Elsewhere, oil fell amid persistent concerns around the demand outlook as Goldman Sachs cut its price forecast again. Bitcoin dropped as last week’s regulatory crackdown by the US Securities and Exchange Commission weighed on sentiment.
Key events this week:
- US CPI, Tuesday.
- Eurozone industrial production, Wednesday.
- US PPI, Wednesday.
- Federal Reserve rate decision, updated economic forecasts, Jerome Powell’s press conference, Wednesday.
- IEA oil market report, Wednesday.
- China property prices, retail sales, industrial production, Thursday.
- China central bank meeting to decide on one-year policy loan rate, Thursday.
- European Central Bank President Christine Lagarde holds press conference following the rate decision, Thursday.
- US initial jobless claims, retail sales, empire manufacturing, business inventories, industrial production, Thursday.
- Bank of Japan rate decision, Friday.
- US University of Michigan consumer sentiment, Friday.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.9% as of 4 p.m. New York time
- The Nasdaq 100 rose 1.8%
- The Dow Jones Industrial Average rose 0.6%
- The MSCI World index rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0760
- The British pound fell 0.5% to $1.2512
- The Japanese yen fell 0.1% to 139.55 per dollar
Cryptocurrencies
- Bitcoin fell 1.3% to $25,806.32
- Ether fell 2.3% to $1,730.84
Bonds
- The yield on 10-year Treasuries was little changed at 3.73%
- Germany’s 10-year yield advanced one basis point to 2.39%
- Britain’s 10-year yield advanced 10 basis points to 4.34%
Commodities
- West Texas Intermediate crude fell 4.4% to $67.06 a barrel
- Gold futures fell 0.3% to $1,972.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Vildana Hajric, Isabelle Lee, Carly Wanna, Emily Graffeo and Peyton Forte.
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