(Bloomberg) — A rebound in the world’s largest technology companies drove stocks higher, with traders also wading through the latest comments from Federal Reserve officials for clues on the central bank’s next steps.
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The S&P 500 bounced back after its worst session in a month. The tech-heavy Nasdaq 100 rose 1.2%, with Nvidia Corp.’s five-day rally topping 13%. Apple Inc. climbed about 2%. US-listed Chinese stocks tumbled as Beijing stopped short of launching more major stimulus, disappointing traders looking for more fuel for a world-beating stock rally. Treasuries saw small moves following a recent selloff, with shorter maturities outperforming.
Fed Governor Adriana Kugler said the US central bank should keep its focus on bringing inflation back to its 2% target, though with a “balanced approach” that avoids an “undesirable” slowdown in employment growth and economic expansion. Officials lowered their benchmark rate by a half point last month, a larger-than-anticipated move that Jerome Powell said was meant to protect a strong labor market.
“While stronger US jobs data (coupled with a firmer ISM Services release) bolster our confidence for a soft landing, the US data is not so strong that the Federal Reserve’s contribution to the global rate-cutting cycle looks set to end,” said Mark Haefele at UBS Global Wealth Management. “We therefore maintain our conviction for investors to position for lower rates.”
The S&P 500 rose to around 5,740. A Bloomberg gauge of the “Magnificent Seven” megacaps climbed over 1.5%. Honeywell International Inc. rose on plans to spin off its advanced materials division. Robinhood Markets Inc. surged on plans to host its first investor day. Roblox Corp. dropped as Hindenburg Research said it’s betting against the gaming platform.
Treasury 10-year yields added one basis point to 4.04%. That’s ahead of a $58 billion sale of three-year notes. West Texas Intermediate crude fell 4.5% to $73.64 a barrel. Oil prices could spike by $10 to $15 a barrel if Israel strikes Iranian export facilities, hedge fund manager Pierre Andurand predicted.
Mohamed El-Erian says that the guessing game that’s taking place over the Fed’s path for monetary policy is creating market volatility.
“Markets are all over the place. In the last 15 days the probability of a 50 basis point cut in November has gone from over 60% to zero. November is next month,” El-Erian, the president of Queens’ College, Cambridge, told Bloomberg Television on Tuesday.
“That is how much uncertainty there has been in this market. These are massive moves based on data points,” he added.
Yields have risen after a healthy decline and for now, this indicates the bond market is pricing in fewer rate cuts and not more, according to Michael Landsberg at Landsberg Bennett Private Wealth Management.
“Yields will likely stay range bound and even if they rise from here, they have plenty of upside room before rising yields start to negatively affect stock prices,” he said.
Corporate Highlights:
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Hon Hai Precision Industry Co. plans to boost server capacity to meet stronger-than-anticipated demand for Nvidia Corp. chips used to develop AI, reflecting its expectations that spending on artificial intelligence will stay high.
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DocuSign Inc. climbed after S&P Dow Jones Indices said that the e-signature company will join the S&P Midcap 400 Index before trading opens on Oct. 11.
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PepsiCo Inc. trimmed its revenue outlook for the year as cash-strapped consumers, boycotts in the Middle East and a major recall hit volumes of its food and beverages.
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Wells Fargo & Co. rose after Wolfe Research upgraded the lender to outperform from peer perform, noting that the “bad news is fully baked.”
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WW International Inc. shares rose after the diet company said it would begin offering a copycat version of weight-loss drugs that costs far less than Novo Nordisk A/S’s Ozempic and Wegovy.
Key events this week:
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Fed minutes, Wednesday
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Fed’s Lorie Logan, Raphael Bostic, Austan Goolsbee and Mary Daly speak, Wednesday
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US initial jobless claims, CPI, Thursday
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Fed’s John Williams and Thomas Barkin speak, Thursday
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JPMorgan, Wells Fargo kick off earnings season for the big Wall Street banks, Friday
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US PPI, University of Michigan consumer sentiment, Friday
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Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.8% as of 11 a.m. New York time
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The Nasdaq 100 rose 1.2%
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The Dow Jones Industrial Average was little changed
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The Stoxx Europe 600 fell 0.6%
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The MSCI World Index rose 0.3%
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Bloomberg Magnificent 7 Total Return Index rose 1.5%
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The Russell 2000 Index rose 0.2%
Currencies
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro was little changed at $1.0970
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The British pound was little changed at $1.3093
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The Japanese yen was little changed at 148.31 per dollar
Cryptocurrencies
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Bitcoin fell 0.6% to $62,659.13
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Ether fell 0.4% to $2,432.03
Bonds
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The yield on 10-year Treasuries advanced one basis point to 4.04%
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Germany’s 10-year yield was little changed at 2.26%
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Britain’s 10-year yield was little changed at 4.20%
Commodities
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West Texas Intermediate crude fell 4.5% to $73.64 a barrel
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Spot gold fell 0.8% to $2,622.29 an ounce
This story was produced with the assistance of Bloomberg Automation.
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