🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Stocks jump after Fed, US data; yen strengthens

Published 2024/05/02, 02:23
Updated 2024/05/03, 02:07
© Reuters. A huge electric stock quotation board is seen inside a building in Tokyo, Japan, December 30, 2022. REUTERS/Issei Kato/File Photo

By Chuck Mikolajczak

NEW YORK (Reuters) -A gauge of global stocks climbed on Thursday after the Federal Reserve indicated it was leaning toward a dovish stance, while the dollar retreated against the yen after another suspected round of intervention by the Bank of Japan.

On Wall Street, U.S. stocks closed with solid gains, after Fed Chair Jerome Powell said that while recent inflation readings mean it will likely take longer than expected for central bank officials to become comfortable that inflation will resume its decline, interest rate increases also remained unlikely.

Markets have consistently scaled back the timing and amount of rate cuts this year from the Fed as inflation has proved to be sticky and the labor market remains on solid footing. After expecting the first cut to come by March at the start of the year, markets now see a better than 60% chance the Fed will cut by at least 25 basis points in September, according to CME's FedWatch Tool.

The U.S. central bank also said it would slow the speed of its balance sheet drawdown starting on June 1 to ensure this process does not create undue stress in financial markets.

U.S. economic data also showed the labor market remains tight, ahead of key government payrolls data due on Friday, while other data indicated worker productivity was subdued in the first quarter.

"He is not intending to put a hike back on the table and the market has already kind of absorbed the idea that it's going to be higher for longer, the key is how much higher for longer and that's tomorrow's report," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.

"Jobless claims at 208,000 today help affirm that, but the labor market report tomorrow will be the big one and affirm the Fed's view of how strong is strong."

Tech shares and consumer discretionary led sector gains, closing up roughly 1.6%, as Qualcomm (NASDAQ:QCOM) surged about 10% following its quarterly results while Amazon (NASDAQ:AMZN) advanced 3.2%.

After the close, Apple (NASDAQ:AAPL) reported a smaller than expected decline in quarterly revenue, and Chief Executive Tim Cook told Reuters the company expects a return to sales growth in the current quarter.

Of the 373 companies in the S&P 500 that reported earnings through Thursday morning, 77.2% have topped analyst expectations, according to LSEG data, above the 67% beat rate since 1994 but slightly below the 79% over the past four quarters.

The Dow Jones Industrial Average rose 322.37 points, or 0.85%, to 38,225.66; the S&P 500 gained 45.81 points, or 0.91%, to 5,064.20; and the Nasdaq Composite gained 235.48 points, or 1.51%, to 15,840.96.

MSCI's gauge of stocks across the globe rose 7.17 points, or 0.95%, to 761.44, on pace for its biggest daily percentage gain since April 23, while Europe's broad FTSEurofirst 300 index closed down 4.50 points, or 0.23%.

Shares in Europe ended slightly lower after touching a one-week low earlier in the session, as investors returned from a midweek holiday and digested the Fed's announcement and a host of earnings reports.

The Japanese yen also remained in focus, as another round of intervention in the currency was suspected shortly after Powell had finished speaking, the second such event this week.

Against the Japanese yen, the dollar weakened 0.78% to 153.26. after falling as low as 153.07 on the session.

The dollar index, which measures the greenback against a basket of six major currencies, fell 0.35% to 105.34, with the euro up 0.15% at $1.0725. Sterling strengthened 0.06% to $1.2534.

© Reuters. Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 29, 2024.  REUTERS/Brendan McDermid/File Photo

U.S. Treasury yields were choppy in the wake of the Fed and economic data, as the yield on benchmark U.S. 10-year notes fell 0.8 basis point to 4.583%, from 4.591% late on Wednesday. The 2-year note yield, which typically moves in step with interest rate expectations, fell 5.2 basis points to 4.8872%, from 4.939%.

Oil prices were little changed after a slump to a seven-week low, losing some ground after the U.S. labor market data. U.S. crude settled down 0.06% at $78.95 a barrel and Brent settled at $83.67 per barrel, up 0.28% on the day.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.