Dow, S&P 500, Nasdaq rally on sign of hope for Fed pivot
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Gaining traction in the middle of the day amid comments from a Federal Reserve official that were perceived as dovish, the major U.S. equity averages finished higher on Thursday. This allowed the S&P 500 and Nasdaq to halt a two-session slide.
The Nasdaq Composite (COMP.IND) closed +0.7%, the S&P 500 (SP500) finished +0.8% and the Dow (DJI) ended +1.1%. The Dow received an extra boost from strong earnings from Salesforce (CRM).
After two days of losses, the S&P 500 advanced 29.96 points to end at 3,981.35. Meanwhile, the Nasdaq concluded trading at 11,462.98, climbing 83.50 on the day. Helped by the CRM earnings, the Dow Jones rose 341.73 points to close at 33,003.57.
Nine of the 11 S&P sectors rose in the broad-based, balanced rally. Utilities was a standout, climbing by 1.8%. Consumer Staples, Real Estate, Materials, Info Tech and Industrials all posted gains of between 1.2% and 1.3%. Energy and Consumer Discretionary posted modest slides.
"Today’s market action was unusual. After dovish comments from Atlanta Fed President Bostic, investors started to bet on a faster-than-expected pivot," analyst Leo Nelissen of BN Capital told Seeking Alpha. "However, while the market rose, bonds weakened, and the dollar strengthened. That is not what a dovish market looks like."
Nelissen added: "It is highly likely that markets will change their opinion as persistently high inflation continues to force the Fed to stick to its strategy to quickly reduce inflation – by any means necessary. After all, the government is looking at much higher interest expenses in the years ahead, putting discretionary spending in danger. There is no room for error. Hence, it’s one of these days where investors need to take dovish comments with a grain of salt."
Stocks showed uncertainty early in the session, continuing the cautious trading that has marked the past few weeks, as investors worried that the Fed would need to keep its hawkish stance longer than previously thought.
These concerns got some early fuel from Thursday's economic reports. Initial jobless claims unexpectedly slipped to 190K, suggesting ongoing strength in the labor market. Meanwhile, a separate report showed that unit labor costs rose a larger-than-expected 3.2% in Q4.
However, stocks rallied during the middle of the day after Atlanta Fed President Raphael Bostic offered a ray of hope for monetary policy. He said that the central bank could be in a position to pause rate hikes this summer.
Selling dominated the bond market early in the day. By the close of the stock market, the 10-year yield (US10Y) was up 8 basis points to 4.087, but the 2-year yield (US2Y) only edged up 1 basis point to 4.90%.
Among active stocks, Silvergate (SI) dropped nearly 58% after the crypto-focused financial institution announced a delay of its annual report filing and several high-profile partners backed away from the company.
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The Fed has to raise rates in order to harness the inflation. If it does not, and inflation rate remains high or continues to increase. What reduces inflation in the end, higher interest rates, will be hard on the market. The medicine will be bitter but is a must take. Learn how to preserve your investment under these new threats.
“It’s amazing to think of all those decades of concern about energy dependence to find the U.S. is the largest exporter of LNG and one of the largest exporters of oil. The U.S. story is part of a larger remapping of world energy". We won't need oil in 10 years so better sell it all now.
Sarcasm at it's best, I hope, because when they find out this electric car takeover won't takeover that's one thing; but when the numbers for all the other needs for oil come into view, I think the reduction in gasoline requirements won't counter balance the requirements for the demand in the other needs remaining.
Most profitable business on earth has been illegal drugs and they sure seem to be flooding in the USA and corrupting a lot of honchos at the top and even laundering money threw the banks and stock markets. The real economy mostly was outsourced to China etc. starting back in the 1970's.
I figure they have a ways to go before rates stop rising. Locking up yield longer term when they do is the real game.
Today, 4:30 PM", this afternoon,Who you going to believe? I think the one who votes!Rob.
