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Stocks Edge Higher in Quiet Session as Bonds Slide: Markets Wrap – Yahoo Finance

(Bloomberg): Chairman Jerome Powell has refrained from giving clues about the outlook for interest rates, even though some officials recently suggested it was too early to declare victory over inflation. Stocks rose in a volatile trading session.

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The S&P 500 made a small move near the key 3,900 mark. This is considered by several technical analysts as a resistance level that will help define a more stable trend. The bond sell-off pushed US 2-year yields closer to 4.3%, which is more sensitive to an imminent Fed decision. The dollar shook.

Powell did not directly comment on the outlook for monetary policy at the forum in Stockholm on Tuesday. “Restoring price stability at a time of high inflation may require measures that are not popular in the short term, as interest rates are raised to slow the economy,” he said. Fed President Michelle Bowman said the central bank still has work to do to keep inflation under control, noting that further tightening is needed.

“Monetary and fiscal policymakers will falter as there is a growing perception that policy support is contributing to today’s challenging inflation environment,” said Lauren Goodwin, portfolio strategist at New York Life Investments. It is unlikely to support economic growth.” “As a result, we expect headline market results to be range-bound and volatile this quarter.”

Some of the world’s largest asset managers, including BlackRock Inc. and Fidelity Investments, have warned that the market is underestimating both inflation and the eventual peak in interest rates. Policy makers meet at the end of the month and are expected to tighten again by 50 basis points or slow to a quarter point rate hike. Thursday’s consumer price index is forecast to slow to 6.5% he in the year to December.

JPMorgan Chase & Co. Chief Executive Jamie Dimon says rate hikes may need to exceed current expectations but favor a pause to fully assess the impact of last year’s hike said. Assuming the Fed raises the benchmark to about 5%, there’s a 50% chance that the current forecast is correct and a 50% chance that it needs to be raised to 6%, he told Fox Business, which aired Tuesday. said in an interview.

Meanwhile, hedge fund billionaire Paul Tudor Jones likens Powell’s fight against inflation to a perfect moon landing attempt, with the Fed chair facing the most difficult economic environment in 40 years. said. If he succeeds, stocks could rise 7% to 8% this year, but if inflation worsens, interest rates will have to keep rising, increasing the risk of a recession, he said in his CNBC report. told to

“The Fed’s reporting has been the subject of extensive and exhaustive debate for much of last year, and the Fed is in a bit of a tough spot,” said Olga Bittel, global strategist at William Blair. has largely neutralized, and now we are moving towards what I consider to be a more restrictive monetary policy setting, which is not necessarily what the Fed is about. , we are concerned that the moment we take our foot off the accelerator, the market will immediately move to an easing of financial conditions.”

Read: JP Morgan trading desk sees CPI helping bear market rally

READ: World Bank Lowers 2023 Forecast, Warns of Global Recession

“Markets have moved too fast for a Fed policy tipping point and conditions are still in place for a sustained stock rally,” said Mark Höfele, chief investment officer at UBS Global Wealth Management. I’m still thinking no,” he said.

Bank of America clients sold $1.4 billion in U.S. stocks in the biggest weekly outflow since November, the firm’s strategists, including Jill Carey Hall, wrote. All three of his client groups – hedge funds, individual investors and institutional investors – were net sellers.

In corporate news, Microsoft Corp. is considering investing as much as $10 billion in OpenAI, creator of the viral artificial intelligence bot ChatGPT, said a person familiar with the company’s plans. Coinbase Global, the largest U.S. digital asset exchange, has laid off nearly 950 employees, or about 20% of its workforce, as the crypto recession worsens and spurs another layoff. doing.

Sentiment among analysts for the broader S&P 500 has soured to levels seen several times before, as the critical earnings season is set to begin on Friday.

Analyst downgrades on earnings forecasts for the S&P 500 over the next two years have reached 32% in the past three months, according to data compiled by Goldman Sachs Group Inc. Aside from the 2008 and 2020 pandemic dropouts, this is the most negative reading since Goldman began tracking the data in 1998.

This week’s main events:

  • Members of the ECB Governing Council speak at the Euromoney conference in Vienna on Wednesday.

  • US CPI, first unemployment claims, Thursday

  • St. Louis Fed President James Bullard at the Wisconsin Bankers Association virtual event Thursday

  • Richmond Fed President Thomas Birkin to speak at VBA/VA Chamber of Commerce on Thursday

  • china trade friday

  • University of Michigan Consumer Sentiment Friday

  • Citigroup, JPMorgan Chase, Wells Fargo to report earnings on Friday

This week’s MLIVE Pulse poll:

Some of the major movements in the market:

stock

  • The S&P 500 was up 0.2% at 12:55 pm New York time.

  • Nasdaq 100 up 0.3%

  • Dow Jones Industrial Average gains 0.1%

  • The MSCI World Index is little changed

currency

  • The Bloomberg Dollar Spot Index is little changed.

  • Euro barely changed at $1.0733

  • British pound falls 0.3% to $1.2149

  • Japanese yen fell 0.3% to 132.22 yen to the dollar

Cryptocurrency

  • Bitcoin climbs 0.8% to $17,324.6

  • Ether rose 1% to $1,331.77

bond

  • 10-year Treasury yield rises 10 basis points to 3.63%

  • German 10-year yield rose 8 basis points to 2.31%

  • UK 10-year yield rose 3 basis points to 3.56%

merchandise

This article was produced in partnership with Bloomberg Automation.

— With contributions from Peyton Forte, Isabel Lee, John McCorry, and Vildana Hadzrich.

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