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(Bloomberg) — U.S. stocks rose this week as strong earnings results from tech companies supported an overall solid image for the corporate sector.
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The Nasdaq 100 soared after the index hit a new closing high on Tuesday. Netflix’s stock soared as its subscriber numbers exceeded expectations, and eBay rebounded after it pledged to cut about 9% of its workforce. US Treasuries rose, with the 10-year Treasury yield falling to around 4.09%. The Bloomberg Dollar Spot Index suffered its biggest decline in a month.
The tech sector continues to be in the spotlight, with Tesla Inc. and International Business Machines Inc. scheduled to report their financial results later in the day. But more broadly, the U.S. earnings season so far has shown that companies are coping well with rising interest rates.
“The stock market is in a bit of a sweet spot at the moment,” said François Limoux, a strategist at La Française Asset Management in Paris. He said: “The US economic news flow is good and European growth is flat, but this is not a drama and no one believes inflationary pressures will return.”
He added that “revenues in the U.S. high-tech and artificial intelligence sectors are also strong, which themselves support the broader market.”
Tom Lee of Fundstrat Global Advisors LLC expects the bull market to eventually extend beyond last year’s tech stocks.
“The 5% we received in the money markets has a short shelf life as the Federal Reserve signals future rate cuts,” he said in a note to clients. “So we see $5.5 trillion in money markets moving into equities, but certainly not all of it. But any move would be positive for stock prices and market breadth.”
Read: Hedge fund stars who got China wrong are paying a high price
Attention now turns to policy meetings at the Bank of Canada later in the day and at the European Central Bank on Thursday. Both are expected to keep rates unchanged, but could give an indication of the approximate timing of their first rate cut.
Eurozone bond yields fell after data showed business activity contracted in January for the eighth straight month. Traders are now pricing in a rate cut worth 136 basis points by the end of the year, 8 basis points more than Tuesday.
Concerns about inflation reignited in the UK after private companies reported their costs rose by the sharpest in five months, due in part to disruptions caused by shipping delays in the Red Sea. UK 10-year gold yields hovered around 4%, and the pound sterling rose.
The yen rose as investors believed that Japanese policymakers were preparing to end negative interest rates early. Following Tuesday’s Bank of Japan meeting, the swap market is increasingly betting on a 25 basis point interest rate hike in April.
Elsewhere, industrial metals prices rose after China signaled plans to stimulate the economy by cutting bank reserve requirements. This should allow Chinese banks to step up lending and buying government bonds. This news also supported Brent crude oil near $80 per barrel.
This week’s main events:
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Canadian interest rate decision Wednesday
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Eurozone S&P Global Services and Manufacturing PMI, Wednesday
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US S&P Global Services and Manufacturing PMI, Wednesday
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Eurozone ECB interest rate decision Thursday
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Germany IFO Business Environment Thursday
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US GDP, new unemployment claims, durable goods, wholesale inventories, new home sales, Thursday
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Japan Tokyo CPI, Friday
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US Personal Income and Expenditures, Friday
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Bank of Japan issues minutes of policy meeting on Friday
The main movements in the market are:
stock
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As of 9:30 a.m. New York time, the S&P 500 was up 0.6%.
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Nasdaq 100 rose 0.9%
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The Dow Jones Industrial Average rose 0.3%.
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Stoxx European 600 rose 1.1%
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MSCI World Index rose 0.1%
currency
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The Bloomberg Dollar Spot Index fell 0.6%.
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The euro rose 0.7% to $1.0932.
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Sterling rose 0.7% to $1.2773.
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The Japanese yen rose 1.1% to 146.69 yen to the dollar.
cryptocurrency
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Bitcoin rose 1.9% to $39,947.15.
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Ether rose 1.1% to $2,225.24
bond
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The 10-year Treasury yield fell 4 basis points to 4.09%.
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Germany’s 10-year bond yield fell 4 basis points to 2.31%.
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UK 10-year bond yields fell 2 basis points to 3.97%.
merchandise
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West Texas Intermediate crude rose 0.8% to $74.95 a barrel.
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Spot gold rose 0.2% to $2,032.57 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Masaki Kondo, Winnie Hsu, John Viljoen, Cristin Flanagan, and Julien Ponthus.
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