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(Bloomberg) — Stock markets are in good shape on solid signs that the world’s largest economy remains in good shape after the Federal Reserve’s aggressive tightening policies. Finishing this week.
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While strong economic data suggests the Fed may not cut rates too dramatically, expectations that authorities will begin easing by the end of the year are fueling risk appetite. Lower Treasury volatility continues to bode well for the S&P 500’s most powerful group, with tech stocks outperforming and the U.S. stock benchmark on the brink of all-time highs.
With earnings season in full swing, traders were waiting for information on consumer sentiment and housing. Chicago Fed President Austan Goolsby said continued declines in inflation warranted discussion of rate cuts, but stressed that the central bank would make decisions on a meeting-by-meeting basis. He spoke just hours before the Fed’s traditional pre-meeting blackout.
The stocks that led the 2023 rally are once again traders’ top picks, with investors betting on growth, technology, the “AI bubble” and the so-called Magnificent, according to Bank of America’s Michael Hartnett.・He is returning to owning Seven. . BofA, citing data from EPFR Global, said there were $4.3 billion in redemptions in U.S. stocks in the week ending Jan. 17, the largest two-week period for tech stock funds since August, compared to $4.0 billion in redemptions in the week ending Jan. 17. He said there was an influx of funds.
“In short, we are out of a bullish boil, and while the ship is not full, it is still firmly tilted in the positive direction,” said Peter Boockvar, author of the Book report.
The S&P 500 erased this week’s losses, and the tech-heavy Nasdaq 100 outperformed after hitting a new all-time high on Thursday. The yield on 10-year government bonds was little changed.
Economist Mohamed El-Erian said markets are overestimating the pace and amount of Fed rate cuts because they are overlooking persistently high inflation.
“I think we’re reaching a pivot, but it won’t be as fast or as deep as the market expects,” said El-Erian, president of Queen’s College, Cambridge and a Bloomberg Opinion columnist.
Traders are lowering their bets on a rate cut as U.S. economic data continues to show resilience and Fed officials say they want to make sure inflation is under control before cutting rates.
As of Friday morning in New York, the yield on the two-year Treasury was roughly in line with the yield on the 30-year Treasury. As for the Fed’s interest rate cut, the market is currently pricing in a rate cut of about 1.4 percentage points this year, but as recently as last week, expectations were that it would ease by up to 1.7 percentage points. On the other hand, the rate cut in March, which had been largely established in the market, is now seen as more of a throwaway.
Policymakers included three interest rate cuts in their outlook released after their December meeting. The Fed held interest rates on hold last month and is expected to keep rates in the 5.25% to 5.5% range for the fourth consecutive time at its Jan. 30-31 meeting.
Company highlights:
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Apple has vowed to open up its coveted iPhone tap-to-pay technology to rivals to avoid potentially costly European Union antitrust fines.
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Amazon.com’s proposed $1.4 billion acquisition of Roomba maker iRobot is expected to be blocked by European Union antitrust regulators over concerns it would harm other robot vacuum makers. .
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Ford Motor Co. has cut production of its F-150 Lightning electric truck amid weak demand for electric vehicles.
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Spirit Airlines says its contract with JetBlue Airways “remains in full force and effect” and how JetBlue will strengthen liquidity after court ruling blocks multibillion-dollar acquisition The company said it is exploring ways to provide some relief to investors.
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JB Hunt Transport Services transported more cargo containers in the fourth quarter than Wall Street expected, suggesting the sector may be recovering from a down year.
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SLB raised its dividend to shareholders by 10%, marking its highest payout since 2020, as drilling growth outside North America boosted the world’s largest oilfield contractor’s performance.
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Ally Financial reported fourth-quarter results that beat analyst expectations and announced the sale of its point-of-sale financial business, which includes $2.2 billion in loans, to Synchrony Financial.
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Comerica said its net interest income will likely fall 11% this year, and reported a series of one-time fees that sharply reduced its fourth-quarter profit.
The main movements in the market are:
stock
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As of 9:31 a.m. New York time, the S&P 500 was up 0.3%.
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Nasdaq 100 rose 0.5%
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The Dow Jones Industrial Average rose 0.2%.
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Stoxx European 600 drops 0.2%
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MSCI World Index rose 0.3%
currency
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Bloomberg Dollar Spot Index little changed
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The euro was almost unchanged at $1.0874.
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The British pound fell 0.3% to $1.2668.
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The Japanese yen fell 0.1% to 148.32 yen to the dollar.
cryptocurrency
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Bitcoin remains almost unchanged at $41,063.15
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Ether rises 1% to $2,477.7
bond
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The 10-year Treasury yield rose 2 basis points to 4.16%.
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German 10-year bond yield remains unchanged at 2.34%
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UK 10-year bond yield remains unchanged at 3.94%
merchandise
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West Texas Intermediate crude rose 0.5% to $74.48 per barrel.
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Spot gold rose 0.4% to $2,031.03 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Farah Elbahrawy, Michael Mackenzie, and Liz Capo McCormick.
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