US stocks gained due to speculation that the Federal Reserve’s tightening cycles may be at an end. Meta Platforms Inc. saw its biggest surge in 2013 which lifted tech-heavy indexes. Treasuries saw a reduction in gains.
S&P 500 surged as high as 1.9% before slowing down. The Nasdaq 100 had experienced a dramatic drop of more than 4 percent, which was enough to push it towards a bullish market since December’s low.
Meta gained 25% after the company’s sales beat expectations. It also stated that it would become smaller and more decisive. Jerome Powell, the central bank’s chief economist, said that inflation has been fought successfully. But labor-market data shows tightness, which could lead to wage pressures. Friday will see the Labor Department release its January hiring report.
Wall Street was gripped by the risk-on mood last month, but it spread to other markets. A wide range of retail favorites rallied, including Carvana Inc. and AMC Entertainment Holdings Inc. Cathie Wood’s flagship exchange-traded funds, which are loaded with speculative names of tech, has risen more than 10% in less than two days, following a wild 28% rise last month.
Investors all over the globe cheer what they perceive to be varying degrees of dovishness from central banks around the world. Investors in the US were encouraged by Powell’s refusal to answer questions about financial conditions. They had expected him to counter recent gains in risk assets. After the Bank of England raised interest rates by half a percentage point, it indicated that it was closing down its tightening cycle. Although the European Central Bank was hawkish, traders were encouraged when Christine Lagarde admitted to disinflation.
Steve Ryder (senior portfolio manager at Aviva Investors), stated, “After the Fed, Bank of England, and Bank of England hinted that they were near the peak in their cycles,”. “We believe this peak tightening backdrop is going to continue to reduce volatility and create attractive income opportunities over the next months.”
The dollar rose while the 10-year Treasury yield hovered at 3.40%
As traders place bets that economic conditions will prevent the Fed from increasing rates, the Fed is positioning in the US swaps markets.
“While the Fed has slowed its rate of rate rises, there’s still much uncertainty on the trajectory and how tightening its monetary policy will affect economic development this year,” Brad Bernstein (a Philadelphia-based managing Director at UBS Wealth Management) said.
However, the focus of investors now will shift to big-tech earnings, he stated.
“Guidance coming from big-tech earnings will likely to set direction of markets in near-term,” he stated.
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Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
