(Bloomberg) — U.S. stocks traded higher on Thursday, as recent readings of jobs and factory inflation were slightly weaker than expected, a boost for those hoping the Federal Reserve is nearing the end point of an era of aggressive interest rate increases.
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The S&P 500 rose 0.3% while the more price-sensitive Nasdaq 100 rose 0.9% after US jobless claims for the week ending April 8 rose to 239,000, compared to estimates of 235,000. Meanwhile, producer prices came in at 2.7% yoy, versus the 3% expected.
Treasury yields fell, with the two-year yield falling to 3.91%. The dollar lost more ground against a basket of currencies, as the euro/dollar exchange rate hit a one-year high.
“For a Fed that’s already leaning towards a pause, this report tips the scale just a bit, especially after yesterday’s CPI failed to reveal any new inflationary problems,” said Christopher Low of FHN Financial. “The link between PPI and CPI is not as clear as it used to be, but consistently small increases — or, as in March, outright decreases — will eventually be seen by consumers.”
This week’s consumer price inflation report showed a decline in headline numbers year-on-year but a rise in core prices. The data follows last week’s March jobs report, which rose at a steady pace with the unemployment rate again falling near record lows. All of which left swaps markets still favoring a quarter-point Fed hike in May, though traders added to bets that the Fed will cut interest rates by the end of the year at a faster pace than expected earlier in the week.
Read more: Traders are boosting their bets on US interest rate cuts this year after the Consumer Price Index
Minutes of the Fed’s March meeting published on Wednesday showed policymakers scaled back expectations of a rate hike this year after a series of bank collapses roiled markets, and stressed they would remain vigilant for the possibility of a credit crunch to further slow the economy. Officials expect a “moderate recession” starting later this year as they “assess the potential economic impact of recent developments in the banking sector.”
“Yes, they talked about recessions, but they talked about mild recessions. So there is no severe recession yet resulting from fallout,” Charles Henry Monshaw, chief investment officer of Sees Group, told Bloomberg TV, referring to the turmoil caused by the collapse of the Silicon Valley bank. SVB.
Europe’s stock index posted modest gains as European Central Bank (ECB) Governing Council member François Villeroi de Gallau spurred hopes of a dovish political lean. Oil is down, gold is up and bitcoin is trading about $30k.
Main events this week:
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US Retail Sales, Business Inventory, Industrial Production, University of Michigan Consumer Confidence, Friday
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The earnings report of major US banks JPMorgan Chase, Wells Fargo and Citigroup on Friday
Some major market movements:
Stores
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The S&P 500 was up 0.3% as of 9:32 a.m. New York time.
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The Nasdaq 100 rose 0.7%.
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The Dow Jones Industrial Average rose 0.2%.
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Stoxx Europe 600 rose 0.3%
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The MSCI World Index was little changed
currencies
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The Bloomberg Spot Dollar Index fell 0.5%.
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The euro rose 0.6 percent to $1.1057
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The British pound rose 0.4 percent to $1.2531
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The Japanese yen rose 0.6 percent to 132.38 per dollar
Digital currencies
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Bitcoin rose 1% to $30,280.3
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Ether rose 5% to $2,003.36
bonds
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The yield on the 10-year Treasury note was little changed at 3.39%.
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Germany’s 10-year yield fell 1 basis point to 2.36%
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The yield on the 10-year British Bund fell 2 basis points, to 3.55%.
goods
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West Texas Intermediate crude fell 0.3 percent to $83.01 a barrel
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Gold futures rose 1.5% to $2,055.10 an ounce
This story was produced with help from Bloomberg Automation.
— With assistance from Mark Cranfield, Jenny Yu, and Tasia Sipahutar.
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