Technology Stocks Fuel Wall Street Rise While Treasuries climb
On Thursday, the stock market was fueled by gains in the technology sector. The benchmark S&P 500 index finished up 0.6%, placing it in the bull market territory, which is an increase of 20% or more from its most recent low in October last year. Meanwhile, Treasuries got a boost after new data pointed to a cooling US labor market, indicating a need for the government to pause interest rate hikes. The Federal Reserve next week will consider this information as it decides whether or not to increase interest rates. In this article, we will delve into the effects of the data on the markets in more detail.
Tech Sector Leads the Way
Investors are back to investing in technology, with the tech-heavy Nasdaq composite up by 1%, reversing the previous session’s losses. The NYSE Fang+ Index of 10 highly traded tech stocks was up 2%. Marija Veitmane, senior multi-asset strategist at State Street Global Markets, stated, “Earnings will go down, but where will they go the least? Usually, these are growth, quality, maybe income, definitely large-cap companies.”
US Stock Earnings
The earnings in US stocks followed this upward trend. This data followed new information that showed the number of new jobless claims rose to 261,000, the highest level since October 2021, boosting hopes the Fed will refrain from raising rates at its next meeting. “In isolation, an increase in initial claims would not affect the decision, but combined with the increase in the unemployment rate in May and the disinflationary signals from the recent PMI reports, the Fed will most likely keep interest rates unchanged at next week’s decision,” said Bill Adams, chief economist at Comerica. The increase in assets also boosted public debt, as the yield on two-year Treasury bills, which is sensitive to rate expectations, fell 0.03 percentage point to 4.52%. The yield on the 10-year note fell by 0.06 percentage points to 3.72%. Bond yields decrease as prices rise.
European Markets Trading Cautiously
European markets were trading cautiously as traders tried to gauge the next policy move by the European Central Bank, which is expected to announce its interest rate decision next Thursday. Europe’s Stoxx 600 finished the day flat, while Germany’s Dax was up 0.2% and France’s Cac 40 was up 0.3%. Downwardly revised data released earlier in the day showed the euro zone economy has shrunk over the past two quarters, with the bloc’s output falling at a quarterly rate of 0.1% in both quarters. The reading could weigh on ECB policy-makers, who previously signaled that the economy’s resilience would give them room to raise the deposit rate above the current 3.25% at their next meeting.
Asian Markets Gain
On the other side of the world, Asian stocks rose with Hong Kong’s Hang Seng index gaining 0.3% and China’s CSI 300 index gaining 0.8%. Japan’s Topix bucked the trend, falling 0.7%.
Oil Prices Fall
Meanwhile, oil prices fell to $75.96 per barrel from a 1.3% fall of international Brent crude. The U.S. benchmark West Texas Intermediate fell 1.7% to $71 29 a barrel.
Additional Piece
Investors and traders are always keeping an eye on the global economy to make measured investments. In recent times due to the COVID-19 pandemic, the stock markets and economies around the world have been in a tumultuous state. This has had a profound effect on how traders make investment decisions. It’s more important now than ever to be well informed and understand the economic indicators and trends that shape markets.
One of the key indicators that economists, traders, and investors alike look at is the Yield Curve. This chart plots yields on bonds with equal credit quality but varying maturity dates. A Yield Curve can indicate market expectations for future growth and inflation, as well as the potential impact of regulatory changes by the Federal Reserve on short and long-term interest rates.
The Yield Curve can provide important information for investors because it can help predict the direction of the economy. In simpler terms, the yield curve looks at the difference in yields between two-year and ten-year bonds. A flatter curve indicates that investors expect lower economic growth and inflation over time, while a steeper curve indicates the opposite.
Given the recent data pointing towards a slowing labor market, it’s expected that the Fed may continue to hold back on rate hikes, which will keep the yield curve slightly flatter than it initially should be. When taken with the broader economic outlook, traders and investors can make more informed decisions with their portfolios.
Conclusion
The stock market continues to climb, driven by gains in the tech sector. Investors are keeping an eye on the global economy’s performance due to the COVID-19 pandemic, which has made measuring investments increasingly difficult. One crucial indicator that investors need to pay attention to is the yield curve, which helps to predict the direction of the economy. It’s expected that the Fed may delay any rate hikes given the recent indications of slowing labor markets, and this will keep the yield curve flatter than it should be. Traders and investors can use this information to make informed decisions with their portfolios.
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Wall Street stocks rose on Thursday fueled by technology gains, while Treasuries rose after new data pointed to a cooling US labor market that would support the case for a pause in interest rate hikes by the government. Federal Reserve next week.
The benchmark S&P 500 finished up 0.6%, putting the blue-chip stock index into bull market territory, defined as an increase of 20% or more from its most recent low, hit last October.
Investors are back to techwith the tech-heavy Nasdaq Composite up 1% and the NYSE Fang+ Index of 10 highly traded tech stocks up 2%, reversing the previous session’s losses.
“Earnings will go down, but where will they go least? Usually these are growth, quality, maybe income, definitely large cap companies,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets.
The earnings in US stocks It also came after new data showed the number of new jobless claims rose to 261,000, the highest level since October 2021, boosting hopes the Fed will refrain from raising rates at its next meeting. week.
“In isolation, an increase in initial claims would not affect the decision, but combined with the increase in the unemployment rate in May and the disinflationary signals from the recent PMI reports, the Fed will most likely keep interest rates unchanged at next week’s decision , said Bill Adams, chief economist at Comerica.
The increase in assets also boosted public debt, as the yield on two-year Treasury bills, which is sensitive to rate expectations, fell 0.03 percentage point to 4.52%. The yield on the 10-year note fell by 0.06 percentage points to 3.72%. Bond yields decrease as prices rise.
The dollar lost 0.7% against a basket of six even currencies, hitting a two-week low.
European markets were trading cautiously as traders tried to gauge the next policy move by the European Central Bank, which is expected to announce its interest rate decision next Thursday.
Europe’s Stoxx 600 finished the day flat, while Germany’s Dax was up 0.2% and France’s Cac 40 was up 0.3%.
Downwardly revised data released earlier in the day showed the euro zone economy has shrunk over the past two quarters, with the bloc’s output falling at a quarterly rate of 0.1% in both quarters.
The reading could weigh on ECB policy makers, who previously signaled that the economy’s resilience would give them room to raise the deposit rate above the current 3.25% at their next meeting.
Asian stocks rose, with Hong Kong’s Hang Seng index gaining 0.3% and China’s CSI 300 index gaining 0.8%. Japan’s Topix bucked the trend, shedding 0.7%.
Meanwhile, oil prices fell, with international Brent crude falling 1.3% to $75.96 a barrel and US benchmark West Texas Intermediate falling 1.7% to $71. $29 a barrel.
https://www.ft.com/content/e02ecc49-4a97-47f6-8a7b-5bef1c71e55d
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