US stocks ended the week on a higher note, driven by speculation that the Federal Reserve would not raise interest rates beyond levels already priced in.
Friday’s rally in the S&P 500 helped break a three-week losing streak. The Nasdaq 100 posted its best day since early February. Sentiment remained upbeat despite a report showing resilience in the services sector, as some investors said the impact of the Fed hike on the economy would be delayed. A measure of prices paid by service providers showed a slow rise in costs, which was appreciated by traders.
Bond yields rose for the week, though Treasuries edged higher on Friday, with the 10-year yield hovering around 3.96%. The dollar had its worst week as a benchmark since mid-January, ending four consecutive weeks of gains.
All eyes will be on the non-farm payrolls report next week to see if the economy can handle more rate hikes. Data this week showed continued labor-market resilience in the US, supporting the Fed to stick with its tightening policy, a theme that pushed nearly every major asset into the red in February.
But after this the hearts of the investors were filled atlanta The Fed’s Rafael Bostic said on Thursday that the central bank could possibly hold off on its rate hikes this summer. Traders interpreted his comments as dovish, even though Bastick and his colleagues said decisions would depend on data and a Fed report on Friday stressed that further rate hikes are likely.
Traders are still optimistic as even the most hawkish Fed officials have not suggested rates may need to go beyond previously pegged levels, said Beloved Mishra, global head of rates strategy at TD Securities. The swap market is pricing a peak fed policy rate of 5.5% in September.
“I think they’ll stay at 5.5% and we’ll have to see how the data develops in the second quarter,” he said on Bloomberg Television.
Mishra also said that strong data does not mean that the Fed’s continued tightening is not working.
“It takes a long time,” she said. “The policy became restrictive only last year.”
Read more: Bond alarms falling on deaf ears in the stock market
Forecast-beating factory data also boosted risk sentiment on Friday China, Oil rose for a fourth day, with confidence in a strong rebound from China supporting prices.
Some key moves in the markets:
Stocks The S&P 500 was up 1.6% as of 4 p.m. New York time The Nasdaq 100 was up 2% The Dow Jones Industrial Average was up 1.2% msci world index Currencies rose 0.4% The Bloomberg Dollar Spot Index fell 0.5% The euro rose 0.3% to $1.0634 The British pound rose 0.8% to $1.2041 The Japanese yen rose 0.7% to 135.85 per dollar The bond yield on 10-year Treasuries declined 10 basis points Germany’s 10-year yield declined four basis points to 2.72% UK 10-year yield declined three basis points to 3.85% Commodity West Texas Intermediate crude rose 2% to $79.74 a barrel Gold futures 1.1 % rose to $1,861.30 an ounce
The text of this story is published from a wire agency feed without any modification. Only the headline has been changed.
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