(Bloomberg) — Stocks saw gains in the final minutes of U.S. trading, even after Federal Reserve Chairman Jerome Powell signaled he was in no rush to make further interest-rate cuts.
Most Read from Bloomberg
Powell said the Fed will continue to cut interest rates “over time,” while reiterating that the overall economy remains solid. The S&P 500 ended the third quarter with a rally of more than $2.5 trillion, dispelling the Fed’s cautious stance.
Despite weakness earlier in the day, the S&P 500 posted its fourth straight quarterly gain — the longest such winning stretch since 2021. The tech-heavy Nasdaq 100 hit a similar run.
“The bull market has survived the third quarter, the historically weakest quarter of the year, and will likely remain so until the end of the year as earnings remain strong, interest rates move lower and consumers continue to spend,” he said. Emily Bowersack Hill at Bowersack Capital Partners.
“We expect the fourth quarter to be very similar to the third quarter – higher volatility, but with a stronger result,” he added.
Meanwhile, the world’s largest stock market posted a historic gain after Powell’s comments. Treasury yields were higher, with the policy-sensitive two-year benchmark trading at 3.64%, after Powell said the U.S. still lacked data to call the November meeting.
However, Treasury debt returned 1.4% this month through Friday, as measured by the Bloomberg US Treasury Total Yield Index. If there is an advance, it will be the market’s longest monthly gain since 2010.
According to Vital Knowledge’s Adam Crisafulli, Powell was “a little hawkish on the fringes, but the Fed still has a lot of cutting to do”. He added that the central bank chief’s comments should prompt markets to consider a half-point cut instead of three-quarters later in the year.
Swaps traders reined in their rate cut bets, which traded close to a three-quarter point move ahead of the US open.
“Powell won’t end the 25bp vs. 50bp debate this afternoon. Or at least it’s unlikely,” BMO’s Ian Lincoln wrote in a note ahead of the meeting. Friday’s employment report is the key event of the week, along with Tuesday’s JOLTS figures from August and a “cooling labor market.” We need to reinforce the idea that it has become the new norm,” he said.
Investors must contend with a cocktail of risks, including rising tensions in the Middle East and a strike by dockworkers at key U.S. ports on Tuesday.
Chicago Fed President Austin Goulsbee expressed his concerns about supply shocks if the strike continues. “It will raise the cost of doing business and lead to shortages,” he told Fox Business.
Meanwhile, the Atlanta Fed’s Rafael Bostic told Reuters he was open to another half point of policy easing at the central bank’s November meeting if upcoming data showed slower-than-expected job growth.
Goldman Sachs Group Inc. led by David Kostin. For strategists, Friday is a strong print bet and could encourage investors to “move from expensive ‘quality’ stocks to less desirable low-quality companies.”
European shares fell about 1% after Jeep maker Stellandis NV cut its profit margin forecast. On Friday, Volkswagen AG issued its second profit warning in three months. Ford Motor Co. and General Motors Co. suffered declines in US business.
This contrasts with the mood in China, where the CSI 300 index rose 9.1% after 2008, spurred by a stimulus package.
Corporate Highlights
-
Verizon Communications Inc., America’s largest wireless carrier, has agreed to sell thousands of mobile phone towers to digital infrastructure company Vertical Bridge.
-
DirecTV and Dish have agreed to merge in a deal that will create the largest pay-TV provider in the United States.
-
REA Group Ltd has pulled away from pursuing Rightmove Plc after being repeatedly rejected by the UK property portal.
Highlights of this week:
-
Atlanta Fed President Raphael Bostick, Fed Governor Lisa Cook, Richmond Fed President Thomas Parkin and Boston Fed President Susan Collins will attend Tuesday’s conference call.
-
ECB policymakers speaking at various venues on Tuesday included Olli Rehn, Luis de Guindos, Isabel Schnabel and Joachim Nagel.
-
BOE Chief Economist Huw Pill speaks at the Confederation of British Industry Economic Development Board on Tuesday
-
The Bank of Japan publishes a summary of comments for September on Tuesday
-
South Korea CPI, S&P Global Manufacturing PMI on Wednesday
-
Fed speakers include Thomas Parkin of Richmond, Beth Hammock of Cleveland, Alberto Musalam of St. Louis and Federal Reserve Governor Michelle Bowman.
-
US non-farm payrolls, Friday
Some key movements in the markets:
Shares
-
The S&P 500 was up 0.4% at 4:02 p.m. New York time
-
The Nasdaq 100 rose 0.3%
-
The Dow Jones Industrial Average was little changed
-
The MSCI world index fell 0.2%
Coins
-
The Bloomberg Dollar Spot Index rose 0.3%
-
The euro fell 0.3% to $1.1133
-
The British pound was little changed at $1.3371
-
The Japanese yen fell 1% to 143.68 per dollar
Cryptocurrencies
-
Bitcoin fell 3.5% to $63,554.51
-
Ether fell 2.4% to $2,598.86
Bonds
-
The yield on 10-year Treasuries rose four basis points to 3.79%
-
Germany’s 10-year yield fell one basis point to 2.12%.
-
Britain’s 10-year yield rose three basis points to 4.00%
materials
-
West Texas Intermediate crude was little changed
-
Spot gold was down 1% at $2,631.75 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Michael McKenzie, Sagarika Jaisinghani, Kit Rees, Margarita Krakosian, and Catherine Bosley.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP
2024-10-01 01:50:14