(Bloomberg) — Rising tech mega-cap stocks pushed stocks higher, pushing the S&P 500 index closer to the 5,000 mark. Bonds tumbled ahead of a record $42 billion sale of 10-year Treasuries.
Most Read Articles on Bloomberg
Stock prices have continued to rise significantly from their October 2022 lows on expectations that a strong economy will continue to drive corporate profits. Traders brushed off concerns that high valuations, weak February seasonality and cautious comments from Federal Reserve officials would push stocks to record highs. Even New York Community Bancorp's further selloff, which has spooked investors over the past week, hasn't deterred stock bulls.
Following the footsteps of all major US equity benchmarks, the MSCI World Index of developed market stocks also rose to record levels.
“The market continues to climb a wall of uncertainty, including changing Fed expectations, geopolitical tensions, and overbought market conditions,” said Nationwide's Mark Hackett. “Although we are entering a downturn, there is strong momentum in the market.”
And if the bond market sees another strong government bid, that momentum could drag into afternoon New York trading. A number of central bank speakers are also on Wall Street's radar. Federal Reserve President Adriana Kugler signaled there was little urgency to cut interest rates anytime soon, making an optimistic case that U.S. inflation will continue to slow. Minneapolis Fed President Neel Kashkari told CNBC that officials need to see “a few more months” of inflation data before easing policy.
Barclays strategists led by Emmanuel Cau said some parts of the stock market looked “frothy” but solid U.S. economic growth and an expected recovery in Europe were likely to support stocks. .
With the exception of U.S. and tech stocks, stocks are supported by solid earnings and cheap valuations, so volatility from the timing and pace of expected rate cuts is more problematic for bonds, they write.
The world's largest exchange-traded funds (ETFs) are at a key inflection point following a blistering 22% rally since late October, but they remain teetering near key technical thresholds in the coming weeks and months. A further rise may be expected.
The $244 billion Invesco QQQ Trust Series 1 (QQQ), which tracks the Nasdaq 100 index, is near key resistance levels from three years ago compared to the broader SPDR S&P 500 ETF, better known by the ticker SPY. It is traded at. According to Bloomberg Intelligence's Anthony Feld, the QQQ/SPY ratio is poised for further upside from here if resistance from February 2021 is decisively broken, providing renewed bullish confirmation for QQQ in absolute terms. will reach a high price.
Wednesday's 10-year Treasury bond auction will be the largest on record, surpassing the previous high of $41 billion reached in November 2020. The latest changes to the Treasury bid size, announced last week, mean that three of the seven government bonds and bonds will be up for auction, including two and two bonds. Five-year bonds are expected to reach a record size in the quarter from February to April.
“This, combined with the fact that the 10-year Treasury yield remains above 4%, even though monetary policy makers have confirmed that the Fed will cut rates later this year,” Ian Lingen and Beil Hartman write. “There is a clear path towards a solid bid acceptance.” At BMO Capital Markets. “Of course, whether an auction tails or stops through will most likely depend on supply structure, as well as tactical auction strategy.”
“All things considered, we are repulsed by the combination of supply growth and the fact that the FOMC does not appear to be in a hurry to start lowering policy rates as uncertainty around the inflation outlook remains high. “There is a tendency to expect this,” they also pointed out.
Company highlights:
-
Ford Motor Co. reported much better-than-expected fourth-quarter results and predicted higher profits in 2024, despite suffering from electric vehicle losses and rising labor costs.
-
Snapchat app parent company Snap Inc. reported lower-than-expected revenue during the busy holiday season and made the investment just a week after much larger rival Metaplatforms Inc. posted its highest revenue growth in two years. I let the house down.
-
Alibaba Group Holding Ltd. aims to assuage investors worried that the Chinese e-commerce and cloud pioneer's growth will plateau as it struggles to fend off new rivals such as PDD Holdings Ltd. The company has given the go-ahead for a $25 billion share buyback.
-
Uber Technologies reported stronger bookings than analysts expected, showing strong global demand for rides and food delivery during the holidays.
-
Chipotle Mexican Grill's fourth-quarter sales and profits exceeded expectations as both transaction value and check size increased, defying concerns about weak consumer sentiment.
This week's main events:
-
China PPI, CPI, Thursday
-
U.S. wholesale inventories, new unemployment claims, Thursday
-
Treasury Secretary Janet Yellen speaks Thursday at the Senate Banking Committee's hearing on the Financial Stability Oversight Council Annual Report.
-
Pharmaceutical CEOs speak Thursday before the Senate Committee on Prescription Drug Pricing
-
ECB chief economist Philip Lane speaks on Thursday
-
ECB releases economic news on Thursday
-
US CPI revisions Friday
-
German Consumer Price Index, Friday
-
President Joe Biden hosts German Chancellor Olaf Scholz at the White House on Friday.
The main movements in the market are:
stock
-
As of 11:14 a.m. New York time, the S&P 500 was up 0.7%.
-
Nasdaq 100 rises 1%
-
The Dow Jones Industrial Average rose 0.4%.
-
Stoxx European 600 falls 0.3%
-
MSCI World Index rose 0.5%
currency
-
Bloomberg Dollar Spot Index little changed
-
The euro was almost unchanged at $1.0765.
-
The British pound rose 0.3% to $1.2631.
-
The Japanese yen was almost unchanged at 147.91 to the dollar.
cryptocurrency
-
Bitcoin remains almost unchanged at $43,123.42
-
Ether fell 0.1% to $2,377.28.
bond
-
The 10-year Treasury yield fell 1 basis point to 4.09%.
-
German 10-year bond yield remains unchanged at 2.29%
-
The UK 10-year bond yield rose 1 basis point to 3.96%.
merchandise
-
West Texas Intermediate crude rose 0.7% to $73.79 per barrel.
-
Spot gold rose 0.2% to $2,040.90 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Michael McKenzie, Elizabeth Stanton and Jessica Menton.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
