(Bloomberg) --U.S. stocks ended the day higher and Treasury yields fell Thursday. Federal Reserve Chair Jerome Powell sidestepped investor concerns over the outlook for rates at an event.
Tech behemoths, including Nvidia Corp., Meta Platforms Inc. and Tesla Inc., drove the Nasdaq 100 higher, shaking off a choppy morning session. Equities also got a boost from Ford Motor Co. and General Motors Co. after the United Auto Workers was said to dial back the wage increases the union was seeking for workers. Dovish-leaning comments from one policymaker and weak consumer spending data helped stoke hope for some easing of the Federal Reserve's messaging ahead of Powell's comments.
September is still shaping up to be the worst month in 2023 for the US stock benchmarks after the central bank left interest rates at the highest in 22 years at its last meeting. Even, if the US enters a recession it should be able to skirt a more severe downturn, according to Richmond Fed President Tom Barkin.
It's still too early to know if another rate increase will be needed, Barkin told Bloomberg Television. Earlier, the Chicago Fed's Austan Goolsbee said policymakers were at risk of overshooting on interest rates by putting too much emphasis on the idea that steep job losses are needed to quell inflation.
Personal consumption, the main driver of the US economy, rose an annualized 0.8% in the April-to-June period, the weakest advance in over a year. Other data showed GDP rose at an unrevised 2.1% rate during the period while weekly jobless claims came in lighter than estimates.
"Many investors are revising their view around what the longer-run interest rate that is appropriate for the main western economies is," Joseph Little, global chief strategist at HSBC Asset Management, said in an interview with Bloomberg Television.
"All the while in the stock market you have this combination of equity investors raising up expectations for 2024 profits," he added. "It is the consensus view: rising bond yields, you have an equity market trading on higher multiples. It is getting worse and worse. Many challenges at this point."
The selloff in US Treasuries had cooled ahead of Powell's speech. In the UK, benchmark government bond yields climbed as much as 20 basis points, the largest daily increase in almost a year on a closing basis. Global bonds are on track for the weakest since February.
The rally in oil paused Thursday after WTI crude traded above $94 a barrel earlier in the week. The dollar and gold both slid.
Key events this week:
- Fed Chair Jerome Powell town hall meeting with educators while Richmond Fed President Tom Barkin speaks Thursday
- Eurozone CPI, Friday
- Japan unemployment, industrial production, retail sales, Tokyo CPI, Friday
- US consumer spending, wholesale inventories, University of Michigan consumer sentiment, Friday
- ECB President Christine Lagarde speaks, Friday
- New York Fed President John Williams speaks, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.6% as of 4:01 p.m. New York time
- The Nasdaq 100 rose 0.8%
- The Dow Jones Industrial Average rose 0.3%
- The MSCI World index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.6% to $1.0564
- The British pound rose 0.5% to $1.2199
- The Japanese yen rose 0.3% to 149.24 per dollar
Cryptocurrencies
- Bitcoin rose 3.3% to $27,115.65
- Ether rose 4.1% to $1,658.93
Bonds
- The yield on 10-year Treasuries declined three basis points to 4.57%
- Germany's 10-year yield advanced nine basis points to 2.93%
- Britain's 10-year yield advanced 13 basis points to 4.48%
Commodities
- West Texas Intermediate crude fell 2.1% to $91.73 a barrel
- Gold futures fell 0.4% to $1,883.80 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Alice Atkins and Boris Korby.
