Home ›› 03 Apr 2023 ›› Stock
A gauge of global stocks was on course for its biggest weekly percentage gain in 4-1/2 months on Friday, with the two-year US Treasury yield set for its first quarterly decline in the past nine, as U.S. inflation data fueled hopes the Federal Reserve may be reaching the end of its rate hiking cycle.
US consumer spending rose moderately in February, and while inflation cooled, it remained elevated enough to possibly allow the Federal Reserve to raise interest rates one more time this year.
Additional data showed US consumer sentiment fell for the first time in four months in February on concerns of an impending recession, although the impact of the recent banking crisis was muted, reported Reuters. Expectations for a 25 basis point rate hike at its May meeting dipped to about 50%, with no hike seen to be just as likely.
However, Boston Federal Reserve President Susan Collins said the inflation data doesn’t alter the Fed’s monetary policy path yet, while New York Fed President John Williams said financial conditions will be a key contributor to his thinking about what’s next for central bank interest rate policy.
“Fed fund futures are basically pricing in a coin flip of a 25 (basis point) hike in May, but calling that the end of it, if they even go there, so anytime the data doesn’t give the Fed a reason to re-engage hawkishly, the market is going to like it,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.
“It’s not like it was a soft print but it was below consensus on pretty much every metric and the core data is creeping closer to where the Fed wants it.”
On Wall Street, US stocks rose, with the S&P 500 set to notch its second straight quarterly advance as it closed at its highest level since February 15, after advancing for three straight weeks to close out the month.
The Nasdaq Composite, up 16.8% in the first quarter, snapped a streak of four straight quarterly declines.
On the session, the Dow Jones Industrial Average (.DJI) rose 415.12 points, or 1.26%, to 33,274.15, the S&P 500 (.SPX) gained 58.48 points, or 1.44%, to 4,109.31 and the Nasdaq Composite (.IXIC) added 208.44 points, or 1.74%, to 12,221.91.
European shares were also higher, after a reading of inflation in the euro zone dropped by the most on record in March, although the core price growth, which excludes food and energy, accelerated.
