(Bloomberg) — Stocks rallied and bond yields tumbled after Jerome Powell said the Fed will offer less “clear guidance” on rate moves and that it will likely be appropriate to slow rate hikes at some point.
The Federal Reserve’s boss said the central bank is moving “expeditiously” when it comes to dealing with price pressures and reassured it has the tools to do the job. Powell also noted that another unusually large boost in rates would depend on data after officials raised rates by 75 basis points for the second straight month.
Expectations for the pace of Fed rate increases eased back — with swap markets showing around 58 basis points of tightening priced in for the next meeting in September and the expected peak for the cycle dropping to around 3.3% — with that kind of level seen toward the end of this year or early in 2023.
Fresh economic data reduced the odds the US will report two straight quarters of a contracting economy and avert what is commonly regarded as a recession. Economists at Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. boosted their estimates for second-quarter gross domestic product after government reports showed firmer durable-goods shipments, a narrower trade deficit and gains in inventories last month.
The Nasdaq 100 soared 4% as Alphabet Inc., Microsoft Corp. and Texas Instruments Inc. posted solid revenue growth and expressed optimism about the coming months. Their results set the tone for a week that will include earnings from behemoths Meta Platforms Inc., Apple Inc. and Amazon.com Inc. Chipmakers surged on news the US Senate passed legislation that includes $52 billion in grants and incentives for semiconductor manufacturing.
Here are some key events to watch this week:
- Apple, Amazon earnings, Thursday
- US GDP, Thursday
- Euro-area CPI, Friday
- US PCE deflator, personal income, University of Michigan consumer sentiment, Friday
Musk, Tesla and Twitter are this week’s theme of the MLIV Pulse survey. Also share your views on the S&P 500’s biggest stocks. Click here to get involved anonymously.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 2.2% as of 2:58 p.m. New York time
- The Nasdaq 100 rose 3.9%
- The Dow Jones Industrial Average rose 1.2%
- The MSCI World index rose 1.7%
Currencies
- The Bloomberg Dollar Spot Index fell 0.6%
- The euro rose 0.8% to $1.0199
- The British pound rose 1.1% to $1.2165
- The Japanese yen rose 0.4% to 136.42 per dollar
Bonds
- The yield on 10-year Treasuries declined eight basis points to 2.73%
- Germany’s 10-year yield advanced two basis points to 0.95%
- Britain’s 10-year yield advanced four basis points to 1.96%
Commodities
- West Texas Intermediate crude rose 2.9% to $97.74 a barrel
- Gold futures rose 1% to $1,752.80 an ounce
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