Title: Wall Street Stocks Rise Amidst Expectations of US Monetary Policy Changes
Introduction: In this article, we will discuss the recent rise in Wall Street stocks led by financials and consumer discretionary stocks. Investors are considering the future path of US monetary policy, and this has led to gains in the blue-chip index. We will also explore the reasons why value stocks and non-tech stocks are starting to trade better, and how this sets a better tone for the market. Additionally, we will examine the recent lawsuits against Coinbase and Binance, which have escalated the regulator’s assault on the cryptocurrency markets. Finally, we will delve into the expectations of further US rate hikes and the recent actions of the Reserve Bank of Australia.
Wall Street Stocks Rise with Financials and Consumer Discretionary Stocks
On Tuesday, Wall Street’s benchmark, the S&P 500, closed up 0.2%, just below the technical bull market territory it briefly entered on Monday after rising more than a fifth from its recent low in October 2022. Financials and consumer discretionary stocks led gains on the blue-chip index, with both sectors up about 1%. Regional banking stocks also advanced, with the KBW Regional Banking Index up 5.4%.
Value Stocks Starting to Trade Better
The recent rise in Wall Street stocks is noteworthy because value stocks, non-tech stocks, are starting to trade better, which sets a better tone for the market. Peter Boockvar, chief investment officer of Bleakley Financial Group, notes that this does not have a fundamental economic basis but is driven by people’s hopes of a ‘Fed is done climbing’ rally. Traders are hoping that the US central bank will cease its monetary tightening at its July meeting.
Coinbase and Binance Lawsuits
Coinbase, one of the day’s biggest movers, had its shares drop by 12% after the Securities and Exchange Commission sued the cryptocurrency exchange, alleging multiple violations of US securities laws. This lawsuit marks an escalation in the regulator’s assault on the cryptocurrency markets following the case filed against Binance earlier in the week.
Expectations of Further US Rate Hikes
Investors have been looking for further signs that the Federal Reserve will resist a rate hike next week after data from the US Department of Labor on Friday showed moderate wage growth last month. Futures markets priced in a quarter-point hike in the federal funds rate in July, according to Refinitiv. While the labor market rebalancing and inflation progress have been encouraging, a firmer growth outlook will likely prompt the Fed to rate again in July, says Jan Hatzius, chief economist at Goldman Sachs.
Reserve Bank of Australia Raises Interest Rates
The Reserve Bank of Australia raised interest rates to 4.1% from 3.85% on Tuesday, escaping market expectations of a pause and signaling that further tightening may be needed. Politicians said inflation had passed its peak but remained “too high” at 7%, as they raised rates for the 12th time in just over a year, with the aim of bringing the rate of price increase back from 2% to 3% target range.
Asian Markets Remain Muted
Asian markets remained muted as Hong Kong’s Hang Seng index lost 0.1%, while the CSI 300 index of Shanghai and Shenzhen-listed stocks fell 0.9%. Japanese benchmark Topix bucked the downtrend, shrugging off early losses to climb 0.7%. Japanese real wages contracted for a 12th month, according to data released on Tuesday, reinforcing expectations that the Bank of Japan will maintain its extremely accommodative monetary stance.
Summary:
Wall Street stocks have risen as investors consider the future path of US monetary policy. Financials and consumer discretionary stocks led gains on the blue-chip index, with both sectors up about 1%. Regional banking stocks also advanced, with the KBW Regional Banking Index up 5.4%. People are hoping that the US central bank will cease its monetary tightening at its July meeting. There have also been recent lawsuits against Coinbase and Binance, which have escalated the regulator’s assault on the cryptocurrency markets. Investors are expecting further US rate hikes, while the Reserve Bank of Australia has already raised interest rates to 4.1% from 3.85%. Asian markets remain muted with Hong Kong’s Hang Seng index losing 0.1% and the CSI 300 index of Shanghai and Shenzhen-listed stocks falling 0.9%. However, Japanese benchmark Topix bucked the downtrend, shrugging off early losses to climb 0.7%.
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Wall Street stocks rose on Tuesday, led by financials and consumer discretionary stocks as investors consider the future path of US monetary policy.
Wall Street’s benchmark, the S&P 500, closed up 0.2%, just below the technical bull market territory it briefly entered on Monday after rising more than a fifth from its recent low in October 2022.
Financials and consumer discretionary stocks led gains on the blue-chip index, with both sectors up about 1%. Regional banking stocks advanced, with the KBW Regional Banking Index up 5.4%.
The tech-heavy Nasdaq Composite was up 0.4%, after reversing the morning’s losses.
“What’s noteworthy today, and what we saw last Friday, is that value stocks, non-tech stocks, are starting to trade better, which sets a better tone for the market,” said Peter Boockvar, chief investment officer of Bleakley Financial Group.
“To me that doesn’t have a fundamental economic basis, it’s just that people don’t want to miss out on a ‘Fed is done climbing’ rally,” he added, nodding to traders’ hopes that the US central bank will cease its monetary tightening. at its July meeting.
Coin basis it was one of the day’s biggest moves, with its shares dropping 12% after the Securities and Exchange Commission sued the cryptocurrency exchange, alleging multiple violations of US securities laws. The lawsuit marked an escalation in the regulator assault on the cryptocurrency markets following the case filed against Binance earlier in the week.
Meanwhile, investors have been looking for further signs that the Federal Reserve will resist a rate hike next week, after data from the US Department of Labor on Friday showed moderate wage growth last month.
A report on US consumer prices, expected ahead of next week’s monetary policy meeting, should show that prices cooled slightly in May, while core prices should have remained unchanged.
“While the labor market rebalancing and inflation progress have been encouraging, a firmer growth outlook will likely prompt the Fed to rate again in July,” said Jan Hatzius, chief economist at Goldman Sachs.
Futures markets priced in a quarter-point hike in the federal funds rate in July, according to Refinitiv.
In Europe, the regional Stoxx 600 was up 0.4%, recovering earlier losses, while Germany’s Dax gained 0.2% and France’s CAC 40 gained 0.1%.
The moves came as Eurostat, the euro zone’s statistics agency, reported that retail sales volumes fell 2.6% year-on-year in April, following a 3.3% decline in the previous month as the high borrowing costs of the blockade continued to weigh on household consumption.
Markets overwhelmingly expect the European Central Bank to lift its key interest rate from the current 3.25% when policymakers meet next Thursday.
THE Reserve Bank of Australia It raised interest rates to 4.1% from 3.85% on Tuesday, escaping market expectations of a pause and signaling that further tightening may be needed.
Politicians said inflation had passed its peak but remained “too high” at 7%, as they raised rates for the 12th time in just over a year in a bid to bring the rate of price increase back from 2% to 3% cent target range.
The Australian dollar was up 0.8% against the US dollar, which traded at $0.67 on the day, while the S&P/ASX 200 Index fell 1.2%.
Asian markets remained muted as Hong Kong’s Hang Seng index lost 0.1% while the CSI 300 index of Shanghai and Shenzhen-listed stocks fell 0.9%.
Japanese benchmark Topix bucked the downtrend, shrugging off early losses to climb 0.7%.
Japanese real wages contracted for a 12th month, according to data released on Tuesday, reinforcing expectations that the Bank of Japan will maintain its extremely accommodative monetary stance.
https://www.ft.com/content/5f3c4e5a-ba9b-4a88-bf81-e11976006f10
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