(Bloomberg) — Stocks climbed as data signaled a strengthening recovery, while dip buyers stepped in following a selloff spurred by a hawkish Federal Reserve.
The S&P 500 advanced after reports showed the U.S. economy expanded more than forecast in the fourth quarter, while jobless claims fell last week. Apple Inc. advanced ahead of its earnings report due after market close. Tesla Inc. dropped as its strong results were overshadowed by cautious comments on supply-chain troubles, while chipmaker Intel Corp. slid on a disappointing profit forecast. Two-year Treasuries retreated, while the dollar rose.
Investors are weighing policy-tightening expectations against the economic rebound, after Fed Chair Jerome Powell on Wednesday endorsed interest-rate liftoff in March and opened the door to more frequent, potentially larger hikes than expected.
Powell’s Hawkish Surprises Mean Treasuries Rout Flattens Curve
“As supply constraints ease, inflation will fall through 2022, and so monetary tightening pressures will fade,” wrote Seema Shah, chief strategist at Principal Global Investors. “This tightening pace should neither spook markets nor disrupt the economic expansion.”
Global stocks are still heading for their worst month since the pandemic roiled markets in 2020. And traders are boosting bets for higher borrowing costs, pricing in five rate hikes from the Fed and another four from the Bank of England.
Traders Ramp Up Bets to See Five Federal Reserve Hikes This Year
Investors are also keeping an eye on geopolitical tension, after Russia criticized U.S. and NATO security proposals aimed at defusing a crisis over Ukraine, while still leaving the door open to further talks.
What to watch this week:
- Euro zone economic confidence, consumer confidence Friday.
- U.S. consumer income, University of Michigan consumer sentiment Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 1.1% as of 9:32 a.m. New York time
- The Nasdaq 100 rose 1.1%
- The Dow Jones Industrial Average rose 0.9%
- The Stoxx Europe 600 rose 0.7%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.5%
- The euro fell 0.8% to $1.1154
- The British pound fell 0.6% to $1.3384
- The Japanese yen fell 0.7% to 115.39 per dollar
Bonds
- The yield on 10-year Treasuries declined five basis points to 1.82%
- Germany’s 10-year yield advanced two basis points to -0.05%
- Britain’s 10-year yield advanced four basis points to 1.24%
Commodities
- West Texas Intermediate crude rose 0.8% to $88.02 a barrel
- Gold futures fell 1.6% to $1,803 an ounce
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