(Bloomberg) — US stocks are holding onto small gains after a brief wobble in technology shares.
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Traders are weighing a variety of catalysts, including a strong forecast from Micron Technology Inc., data highlighting a resilient US economy and China’s pledge of fiscal stimulus.
The S&P 500 and the Nasdaq 100 are off the highs of the day. The dollar stayed lower. The 10-year US Treasury yield advanced to around 3.80%.
Earlier, revised data showed the US economy emerged from the pandemic in better shape than initially expected. A decline in US jobless claims underscored the resilience of the labor market.
“Slowing, growing — whatever you want to call what the economy is doing, it clearly is not in any meltdown,” said Rubeela Farooqi, chief US economist at High Frequency Economics, adding the present levels of initial claims are extremely low by historic standards.
Jason Bloom, head of fixed income, alternatives and ETF strategies at Invesco, was also upbeat about the economy.
“After 2001 and 2008, people got into the habit of thinking there’s got to be something lurking under the surface that’s going to tank everything,” Bloom said. “But there’s been enough stress and enough jolts of volatility that I think we would have shaken that bubble loose if it was there.”
The promises by China’s Politburo, alongside growing expectations that the Federal Reserve and European Central Bank will push ahead with rate cuts, boosted sentiment on Thursday. While traders were waiting for Fed Chair Jerome Powell’s commentary, his pre-recorded speech didn’t include details on the economic outlook or path for monetary policy. Other Fed officials are also speaking at various events today.
“The message, over the last 10 days or so, from monetary and fiscal policymakers across the globe, has been clear and undeniable — the policy ‘put’ is well and truly back,” said Michael Brown, a strategist at Pepperstone Group Ltd. “The path of least resistance is likely to continue to lead to the upside, over both the short- and medium-term.”
Money markets have flipped to favor a half-point cut by the Fed in November, with traders now pricing almost 39 basis points of reductions after lackluster US consumer data earlier in the week.
The US central bank’s preferred price metric and a snapshot of consumer demand will give more clues on the economy’s health on Friday.
“The Federal Reserve is more concerned about growth than they let on,” said Vanguard Chief Economist Joe Davis on Bloomberg TV. “Our view is they are going to be more aggressive in the near term.”
China Doubts
The bid to revive growth by China’s top leaders on Thursday added to a slew of measures from Beijing this week that have supercharged local assets. The CSI 300 Index is headed for its biggest weekly gain in almost a decade.
But questions remain over the long-term impact of the measures.
“I wouldn’t be surprised if tomorrow we are going to see a bit of a pullback,” Helen Jewell, chief investment officer at BlackRock Fundamental Equities EMEA, told Bloomberg TV. “This is what is happening in the markets right now — you end up risk-on one day, risk-off the next day. The Chinese economy is still very fragile.”
Swiss Cut
Elsewhere, the Swiss National Bank cut borrowing costs by a quarter point at a third straight meeting and warned of more to come if needed in its attempt to contain the strength of the franc.
In commodities, oil slid for the second day as Saudi Arabia was reportedly committed to increasing output in December, while Libya named its new central bank governor, opening the way to reviving some crude production.
Key events this week:
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ECB President Christine Lagarde speaks, Thursday
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China industrial profits, Friday
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Eurozone consumer confidence, Friday
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US PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.2% as of 11:24 a.m. New York time
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The Nasdaq 100 rose 0.2%
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The Dow Jones Industrial Average rose 0.5%
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The Stoxx Europe 600 rose 1.1%
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The MSCI World Index rose 0.5%
Currencies
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The Bloomberg Dollar Spot Index fell 0.5%
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The euro rose 0.4% to $1.1178
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The British pound rose 0.7% to $1.3416
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The Japanese yen was little changed at 144.71 per dollar
Cryptocurrencies
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Bitcoin rose 2.3% to $64,937.41
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Ether rose 2.2% to $2,638.52
Bonds
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The yield on 10-year Treasuries advanced one basis point to 3.80%
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Germany’s 10-year yield was little changed at 2.17%
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Britain’s 10-year yield advanced one basis point to 4.00%
Commodities
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West Texas Intermediate crude fell 2.6% to $67.86 a barrel
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Spot gold rose 0.5% to $2,668.92 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Denitsa Tsekova, Margaryta Kirakosian, Winnie Hsu, Divya Patil, Richard Henderson, Ben Priechenfried, James Hirai, Sujata Rao and Alex Nicholson.
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