(Bloomberg) — Stocks maintained their gains in Wednesday trading, after a batch of strong earnings from technology companies reassured investors that corporate America has been able to handle higher interest rates.
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Advances in the shares of Nvidia Corp. and Microsoft Corp. kept the S&P 500 firmly in the green. The Nasdaq 100 rose more than 1%, buoyed by Netflix Inc. after the stream-video company’s subscriber numbers topped expectations. The US 30-year yield rose to its highest level so far this year while the 10-year rate lingered around 4.17%. The Bloomberg Dollar Spot Index stayed lower.
With earnings due later in the day from Tesla Inc. and International Business Machines Corp., the spotlight remains on the tech sector. Sentiment on Wednesday was boosted by US data showing business activity expanded in January by the most in seven months. The implications bode well for stocks, according to Renaissance Macro’s Neil Dutta.
“Growth is up and inflation is down. The former puts a ceiling on how many cuts the Federal Reserve will do while the latter means the Fed still ends up cutting,” he said. “Very good scenario for equity markets.”
As investors await a slew of US economic data — including gross domestic product — on Thursday, they’re continuing to mull when the Fed will cut interest rates.
“Frankly, everything depends on the incoming data now and there are a lot of potentially significant releases over the next few weeks that could swing the odds of a March rate cut in either direction,” Paul Ashworth, chief North America economist at Capital Economics, wrote. “We still think the Fed will lower rates by 25 basis points at that upcoming meeting.”
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Meanwhile, Bank of Canada held its key interest rate at 5%, as expected, and signaled it’s done hiking. Also on the roster this week is European Central Bank’s policy meeting on Thursday. Euro-area bond yields slipped earlier after data showed business activity contracted in January for the eighth month.
Elsewhere, industrial metals prices received a boost after China signaled plans to stimulate its economy by cutting the reserve requirement ratio for banks. The move should allow Chinese banks to step up lending and their purchases of government bonds. The news also supported Brent crude around $80 a barrel.
Key events this week:
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Eurozone ECB rate decision, Thursday
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Germany IFO business climate, Thursday
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US GDP, initial jobless claims, durable goods, wholesale inventories, new home sales, Thursday
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Japan Tokyo CPI, Friday
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US personal income & spending, Friday
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Bank of Japan issues minutes of policy meeting, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.5% as of 1:56 p.m. New York time
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The Nasdaq 100 rose 1.1%
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The Dow Jones Industrial Average was little changed
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The MSCI World index rose 0.1%
Currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro rose 0.4% to $1.0894
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The British pound rose 0.3% to $1.2730
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The Japanese yen rose 0.6% to 147.46 per dollar
Cryptocurrencies
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Bitcoin rose 1.4% to $39,740.56
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Ether rose 0.5% to $2,213.92
Bonds
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The yield on 10-year Treasuries advanced five basis points to 4.17%
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Germany’s 10-year yield declined one basis point to 2.34%
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Britain’s 10-year yield advanced two basis points to 4.01%
Commodities
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West Texas Intermediate crude rose 0.7% to $74.88 a barrel
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Spot gold fell 0.7% to $2,015.49 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from John Viljoen, Cristin Flanagan, Julien Ponthus, Sujata Rao, Felice Maranz and Isabelle Lee.
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