(Bloomberg) — Stocks rose and bond yields fell after the Federal Reserve kept its forecast for three rate cuts in 2024, allaying concern about a delay in reversing the steepest hikes in a generation.
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Equities headed toward another all-time high on speculation that policy easing will bolster the outlook for Corporate America. A rebound in Treasuries trimmed this year’s selloff that was driven by concern about rates being higher for longer.
Policymakers signaled they remain on track to cut rates this year for the first time since March 2020, but they now see just three reductions in 2025 — down from four forecast in December The central bank also reiterated its intention to continue reducing its balance sheet by as much as $95 billion per month. Wall Street is now awaiting remarks from Jerome Powell in a press conference starting at 2:30 p.m. in Washington.
The S&P 500 briefly topped 5,200. Treasury two-year yields declined six basis points to 4.62%. The dollar fluctuated.
Ahead of the Fed decision, bond traders had stepped up short bets against Treasuries, buying derivatives to protect against a selloff.
Meantime, US funding markets are offering signs of encouragement to the Fed as it determines exactly how and when to slow the pace at which it drains excess cash from the financial system. Short-term funding markets have been stable, and for now, stress free. That offers considerable flexibility and a positive backdrop as Fed officials meet — and likely discuss the path ahead for QT.
There were no companies looking to sell debt in the US high-grade bond market on the Fed decision day, according to an informal survey of debt underwriters.
Sales year-to-date reached $501 billion, the fastest pace ever, according to data compiled by Bloomberg News. That’s well ahead of the $342 billion average over the last five years.
Corporate Highlights:
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The US will award Intel Corp. $8.5 billion in grants and as much as $11 billion in loans to help fund an expansion of its semiconductor factories, marking the largest award from a program designed to reinvigorate the domestic chip industry.
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Boeing Co. predicted a massive cash drain for the first quarter as regulatory scrutiny and slower output of its 737 Max jetliner following a January mid-air accident take their toll on its finances.
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Reddit Inc. and its selling shareholders are guiding that they could price the social media company’s initial public offering at the top of its marketed range or above, according to people familiar with the matter.
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Short seller Hindenburg Research targeted data center owner Equinix Inc. Wednesday, alleging that the company manipulates its accounting and is selling an “AI pipe dream.” A representative for Equinix said the firm is investigating the claims.
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Chipotle Mexican Grill Inc.’s board proposed a 50-to-1 stock split to broaden the burrito chain’s investor base after a 13,000% run-up in the stock since its initial public offering.
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JPMorgan Chase & Co. unexpectedly lifted its dividend 9.5% in the wake of a record annual profit and as regulators signal they may rethink proposals for tightening capital rules.
Key events this week:
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Eurozone S&P Global Services PMI, S&P Global Manufacturing PMI, Thursday
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Bank of England rate decision, Thursday
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US Conference Board leading index, existing home sales, initial jobless claims, Thursday
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Nike, FedEx earnings, Thursday
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Japan CPI, Friday
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Germany IFO business climate, Friday
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Atlanta Fed President Raphael Bostic speaks, Friday
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ECB’s Robert Holzmann and Philip Lane speak, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.3% as of 2:08 p.m. New York time
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The Nasdaq 100 rose 0.4%
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The Dow Jones Industrial Average rose 0.4%
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The MSCI World index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro rose 0.2% to $1.0886
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The British pound rose 0.2% to $1.2743
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The Japanese yen fell 0.4% to 151.43 per dollar
Cryptocurrencies
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Bitcoin rose 1.3% to $64,571.01
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Ether rose 1.7% to $3,335.11
Bonds
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The yield on 10-year Treasuries declined three basis points to 4.26%
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Germany’s 10-year yield declined two basis points to 2.43%
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Britain’s 10-year yield declined four basis points to 4.02%
Commodities
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West Texas Intermediate crude fell 2% to $81.83 a barrel
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Spot gold rose 0.6% to $2,170.57 an ounce
This story was produced with the assistance of Bloomberg Automation.
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