US stocks rose after recent economic data and a smaller-than-expected interest-rate hike from the Bank of Canada buoyed hopes that the Federal Reserve may soon reach the end of its tightening regime.
(Bloomberg) — US stocks rose after recent economic data and a smaller-than-expected interest-rate hike from the Bank of Canada buoyed hopes that the Federal Reserve may soon reach the end of its tightening regime.
The S&P 500 climbed after fluctuating earlier in the session. The tech-heavy Nasdaq 100 pared losses that topped 2%.
Treasuries rallied after data showed the US merchandise-trade deficit widening. Sales of new US homes fell in September, another indication that the economy is starting to see the effects of the Fed raising rates sharply. A gauge of the dollar declined for a second day to its lowest level in three weeks.
Stocks had been buoyed in recent days by mostly solid earnings and speculation the Federal Reserve may curb the pace of rate increases. Sentiment took a hit earlier on Wednesday after earnings from megacap companies including Alphabet Inc. and Microsoft Corp. highlighted the impact the Fed, and consequently the surging dollar, had on the economy.
The Bank of Canada unexpectedly slowing its pace of interest-rate hikes amid fears of a recession lifted markets mid-morning. Investors are now mulling whether other central banks could learn from their Canadian peer as they try to work out how aggressively they need to keep tightening to combat inflation.
But it’ll be challenging for the Fed to announce that they’re going to be less hawkish, as they have to manage investors’ expectations along the way, according to Dustin Thackeray, chief investment officer at Crewe Advisors.
“They obviously don’t want to be too dovish and the market is obviously looking for any sort of a sign from the Fed that we’re hitting the break, so to speak, on rate increases,” he said by phone. “If they continue on their too hawkish stance, there is a risk that things kind of get out of hand on that end as well. So they’re definitely walking a very fine line.”
Key events this week:
- Earnings due this week include: Apple, Exxon Mobil, Ford Motor, Credit Suisse, Airbus, Amazon, Bank of China, Boeing, Caterpillar, Cnooc, Intel, McDonald’s, Merck, Samsung Electronics, Shell, Vale, Volkswagen
- ECB rate decision, Thursday
- US GDP, durable goods orders, initial jobless claims, Thursday
- Bank of Japan policy decision, Friday
- US personal income, personal spending, pending home sales, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.6% as of 11:39 a.m. New York time
- The Nasdaq 100 fell 0.2%
- The Dow Jones Industrial Average rose 1%
- The Stoxx Europe 600 rose 0.6%
- The MSCI World index rose 1.6%
Currencies
- The Bloomberg Dollar Spot Index fell 1%
- The euro rose 1.2% to $1.0081
- The British pound rose 1.3% to $1.1626
- The Japanese yen rose 1% to 146.43 per dollar
Cryptocurrencies
- Bitcoin rose 3.7% to $20,932.42
- Ether rose 7.2% to $1,579.76
Bonds
- The yield on 10-year Treasuries declined nine basis points to 4.01%
- Germany’s 10-year yield declined five basis points to 2.12%
- Britain’s 10-year yield declined five basis points to 3.58%
Commodities
- West Texas Intermediate crude rose 3% to $87.88 a barrel
- Gold futures rose 1.1% to $1,676.20 an ounce
–With assistance from Allegra Catelli, Abigail Moses, Robert Brand, Vildana Hajric and Peyton Forte.
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