S&P 500, Nasdaq score longest win streak in 2 years on rates view
Stocks Rise as U.S. Treasury Yields Retreat
U.S. stocks soared on Tuesday, with the S&P 500 and Nasdaq experiencing their longest winning streak in two years. The decline in U.S. Treasury yields boosted megacap growth stocks, while investors eagerly awaited the Federal Reserve’s stance on interest rates.
The benchmark 10-year Treasury note yield was on track for its fifth decline in six sessions, signaling that the Fed may have concluded its rate hike cycle. Yields continued to drop after a successful auction of $48 billion in 3-year notes, with auctions of the 10-year note and 30-year bond scheduled later in the week.
While expectations of the Fed’s rate hike cycle coming to an end have grown, the market remains cautious about the possibility of further hikes. Central bank officials have been careful in their comments regarding future rate adjustments.
According to CME’s FedWatch Tool, the market is currently pricing in a 90.2% chance that the Fed will maintain rates at its December policy meeting, up from 68.9% a week ago.
Fed Governor Christopher Waller described the third-quarter U.S. economic growth as a “blowout” performance that warrants attention as the central bank considers its next policy moves. Fellow Governor Michelle Bowman interpreted the recent Gross Domestic Product number as evidence of a strong economy that may require a higher Fed policy rate.
Federal Reserve Bank of Minneapolis President Neel Kashkari and Chicago Fed President Austan Goolsbee have not ruled out rate cuts.
Fed Chair Jerome Powell is scheduled to speak on Wednesday and Thursday.
Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida, commented, “That is the story today, that the Fed is done, but yesterday it was maybe not. Powell is going to speak on Thursday so that is going to leave the door open. But what the market is telling you – the market, traders – are pushing for is we’re all done, it’s a rate cut, almost as if they are trying to force the hand.”
The decline in yields boosted megacap growth stocks, including Microsoft, Apple, and Amazon, which were the biggest contributors to the gains in both the S&P 500 and Nasdaq.
The Dow Jones Industrial Average rose 56.94 points, or 0.17%, to 34,152.8; the S&P 500 gained 12.40 points, or 0.28 %, at 4,378.38; and the Nasdaq Composite added 121.08 points, or 0.90 %, at 13,639.86.
The S&P 500 achieved its seventh consecutive day of gains, while the Nasdaq recorded its eighth straight advance, marking the longest winning streak for both indices in two years. The Dow saw its seventh consecutive session of gains, the longest since a 13-session run in July.
The energy sector was the worst performer, falling 2.2% due to concerns about demand and a stronger dollar.
Dallas Federal Reserve Bank President Lorie Logan stated that while she supported keeping the Fed’s policy rate unchanged last week to assess if financial conditions are tight enough to curb inflation, the rate still remains too high.
Uber Technologies rose 3.7% after projecting higher fourth-quarter adjusted core profit.
Datadog surged 28% after raising its forecast for annual adjusted profit and revenue.
On the NYSE, declining issues outnumbered advancers by a ratio of 1.2-to-1, while on the Nasdaq, declining issues outnumbered advancers by a ratio of 1.1-to-1.
The S&P 500 recorded 15 new 52-week highs and three new lows, while the Nasdaq recorded 48 new highs and 145 new lows.
Volume on U.S. exchanges was 10.08 billion shares, compared with the 10.94 billion average for the full session over the last 20 trading days.
Reporting by Chuck Mikolajczak; Editing by Richard Chang
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How did the decline in U.S. Treasury yields impact the rise in U.S. stocks?
Stocks Rise as U.S. Treasury Yields Retreat
U.S. stocks soared on Tuesday, with the S&P 500 and Nasdaq experiencing their longest winning streak in two years. The decline in U.S. Treasury yields boosted megacap growth stocks, while investors eagerly awaited the Federal Reserve’s stance on interest rates.
The benchmark 10-year Treasury note yield was on track for its fifth decline in six sessions, signaling that the Fed may have concluded its rate hike cycle. Yields continued to drop after a successful auction of $48 billion in 3-year notes, with auctions of the 10-year note and 30-year bond scheduled later in the week.
While expectations of the Fed’s rate hike cycle coming to an end have grown, the market remains cautious about the possibility of further hikes. Central bank officials have been careful in their comments regarding future rate adjustments.
According to CME’s FedWatch Tool, the market is currently pricing in a 90.2% chance that the Fed will maintain rates at its December policy meeting, up from 68.9% a week ago.
Fed Governor Christopher Waller described the third-quarter U.S. economic growth as a “blowout” performance that warrants attention as the central bank considers its next policy moves. Fellow Governor Michelle Bowman interpreted the recent Gross Domestic Product number as evidence of a strong economy that may require a higher Fed policy rate.
Federal Reserve Bank of Minneapolis President Neel Kashkari and Chicago Fed President Austan Goolsbee have not ruled out rate cuts.
Fed Chair Jerome Powell is scheduled to speak on Wednesday and Thursday.
Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida, commented, “That is the story today, that the Fed is done, but yesterday it was maybe not. Powell is going to speak on Thursday so that is going to leave the door open. But
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