March 2, 2024

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Wall Street gains, Treasury yields fell before Powell's testimony

Wall Street gains, Treasury yields fell before Powell’s testimony

  • European stocks, S&P futures fell
  • Bond yields decline
  • Beijing sets a lower-than-expected 5% growth target.
  • The markets are preparing for the Powell meetings, and the meetings of the Bank of Japan, the Bank of Canada and the Reserve Bank of Australia

NEW YORK (Reuters) – Wall Street rose and Treasury yields fell as investors weighed growth prospects in China and looked ahead to U.S. Federal Reserve Chairman Jerome Powell’s congressional testimony and important jobs data expected later in the week.

All three major US stock indices gained ground on Monday, seemingly to extend last week’s rally, with lower Treasury yields boosting interest rate-sensitive mega stocks.

The decline in US factory orders came on the heels of modest growth estimates from China, which boosted hopes that the economic downturn could translate into slowing inflation.

“Guidelines around economic growth outside of China are seen as anti-inflationary,” said Peter Tose, chairman of Chase Investments in Charlottesville, Virginia.

“The slow growth figure has led to the belief that if the economy is slowing that is a good thing to think that inflation is going down, which supports the belief that we may be nearing the end of the (Federal Reserve) rate hike cycle.”

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On Tuesday and Wednesday, Federal Reserve Chairman Jerome Powell is scheduled to give semi-annual testimony before Congress, which will be closely analyzed for any clues regarding the extent and duration of the central bank’s restrictive monetary policy aimed at curbing inflation.

Moreover, the long-awaited February employment report from the Labor Department is expected on Friday. Any signs of abating in the robust labor market will be seen as a sign that the Fed’s hawkish tactics are having the desired effect.

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The Dow Jones Industrial Average increased 122.6 points, or 0.37%, to 33,513.57 points, the Standard & Poor’s 500 increased 26.33 points, or 0.65%, to 4,071.97 points, and the Nasdaq Composite Index increased by 104.07 points. or 0.89% to 11,793.07.

European stocks reversed previous gains and remained essentially unchanged after modest Chinese growth estimates indicated a possible drop in demand for European commodities.

The pan-European STOXX 600 index (.STOXX) lost 0.01% and the MSCI measure of stocks around the world (.MIWD00000PUS) rose 0.68%.

Emerging market stocks rose 0.64%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed up 0.57%, while Japan’s Nikkei (.N225) rose 1.11%.

US Treasury yields continued to decline as weak demand supported hopes that the Federal Reserve is nearing the end of its rate hike phase.

The benchmark 10-year note recently rose 5/32 in price to 3.9459%, from 3.963% late Friday.

The 30-year bond price rose last 14/32 to 3.8621% from 3.887% late Friday.

The dollar lost ground against a basket of global currencies ahead of Powell’s testimony and jobs data.

The dollar index fell 0.29 percent, with the euro rising 0.41 percent to $1.0678.

The Japanese yen strengthened 0.05% against the dollar at 135.82 per dollar, while the British pound was last traded at $1.2021, down 0.16% on the day.

Crude oil prices headed lower after lower growth expectations for China fueled fears of falling demand.

US crude fell 0.53% to $79.26 a barrel, and Brent crude closed at $85.17, down 0.77% for the day.

Gold consolidated its recent gains, with the safe-haven metal dropping ahead of Powell’s congressional testimony.

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Spot gold fell 0.2% to $1,851.53 an ounce.

Reporting by Stephen Kolb. Additional reporting by Yoruk Bahceli and Wayne Cole. Edited by Shounak Dasgupta

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