(Bloomberg) — Stocks rose and bond yields fell, with Jerome Powell reiterating that he expects the Federal Reserve to cut rates in 2024 — while still signaling officials are in no rush to do that amid economic strength.
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Wall Street took his remarks as a “no news is good news” development, with equities rebounding from a slide in the previous session and Treasuries remaining higher. The Fed chief said it will likely be appropriate for officials to begin lower borrowing costs “at some point this year,” but made clear they’re not ready yet. He also expects to see “continued growth at a solid pace.”
“The Fed can afford to sit on higher rates until the labor market starts to crack,” said Jamie Cox at Harris Financial Group. “Maximum employment is the stronger of the two mandates for rate cuts, and there is no there, there to force cuts at this point. So, the Fed has a free pass to inflation fight, for now.”
To Andrew Hunter at Capital Economics, his remarks “do not change our view that the Fed is likely to start cutting rates in June.”
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Traders also kept a close eye on the latest labor-market readings. A report known as JOLTS showed US job openings remained elevated in January. Meantime, companies boosted hiring in February at a moderate pace, with private payrolls increasing by 140,000 — while trailing estimates. The Fed will also release its Beige Book survey of regional business contacts.
The S&P 500 reclaimed its 5,100 mark, while the Nasdaq 100 rose about 1%. Nvidia Corp. led gains in megacaps. CrowdStrike Holdings Inc. surged 15% on a bullish forecast. US 10-year yields fell four basis points to 4.11%. Bitcoin resumed its rally to top $66,000.
Corporate Highlights:
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Abercrombie & Fitch Co. reported fourth-quarter earnings that exceeded forecasts, underscoring the apparel retailer’s ability to maintain momentum despite uncertain economic conditions.
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Nordstrom Inc. is forecasting muted revenue and comparable sales growth this year as sluggish demand at its high-end namesake stores offsets an improving outlook at its off-price Rack stores.
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Foot Locker Inc. reported sales that surpassed Wall Street’s expectations, overcoming concerns of a pullback in consumer spending on sportswear.
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JD.com Inc. initiated a $3 billion stock repurchase program and reported a better-than-expected 3.6% rise in revenue, helped by a broader product lineup and price cuts to target cost-conscious Chinese consumers.
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Grifols SA slumped after Moody’s Investors Service placed the Spanish blood plasma company’s rating on review for downgrade and short seller Gotham City Research raised new questions on its accounting methods.
Key Events This Week:
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China trade, forex reserves, Thursday
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European Central Bank’s rate decision, Thursday
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US initial jobless claims, trade, Thursday
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President Joe Biden delivers the State of the Union address, Thursday
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Fed Chair Jerome Powell testifies before the Senate Banking Committee, Thursday
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Cleveland Fed President Loretta Mester speaks, Thursday
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Eurozone GDP, Friday
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US nonfarm payrolls, unemployment, Friday
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New York Fed President John Williams speaks, Friday
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ECB Governing Council member Robert Holzmann speaks, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.7% as of 11:04 a.m. New York time
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The Nasdaq 100 rose 0.9%
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The Dow Jones Industrial Average rose 0.5%
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The Stoxx Europe 600 rose 0.3%
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The MSCI World index rose 0.7%
Currencies
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The Bloomberg Dollar Spot Index fell 0.4%
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The euro rose 0.4% to $1.0903
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The British pound rose 0.3% to $1.2741
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The Japanese yen rose 0.4% to 149.42 per dollar
Cryptocurrencies
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Bitcoin rose 5.2% to $66,613.7
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Ether rose 7.6% to $3,791.57
Bonds
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The yield on 10-year Treasuries declined four basis points to 4.11%
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Germany’s 10-year yield was little changed at 2.33%
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Britain’s 10-year yield was little changed at 4.00%
Commodities
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West Texas Intermediate crude rose 2.9% to $80.42 a barrel
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Spot gold rose 0.7% to $2,142.01 an ounce
This story was produced with the assistance of Bloomberg Automation.
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