NEW YORK, March 3 — US stocks rallied yesterday, as Treasury yields pulled back from earlier highs following comments from Atlanta Federal Reserve President Raphael Bostic about his favoured path of interest rate hikes for the central bank.
In an argument for quarter-point hikes, Bostic said he favoured “slow and steady“ as the appropriate course of action for the Fed, as the impact of higher interest rates may only start to be felt in the spring.
The yield on 10-year Treasury notes had earlier touched a fresh four-month high of 4.091 per cent after data showed the number of Americans filing new unemployment claims fell again last week, indicating continued strength in the labour market, while a separate report showed US labour costs grew faster than initially thought in the fourth quarter. The 10-year yield was last up 6.7 basis points to 4.064 per cent.
The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down 0.4 basis points at 4.885 per cent after earlier touching a fresh 15-year high at 4.944 per cent.
“Bostic has been a little bit more hawkish so the fact that he basically said 25 was comforting because he has been on the hawkish end of hawkish people,” said Rhys Williams, chief strategist at Spouting Rock Asset Management in Bryn Mawr, Pennsylvania.
“The Fed is not crazy, they understand monetary policy works with a lag, so you are just starting to see now the impact of the first rate hikes, let alone the other 400 basis points they did.”
The Dow Jones Industrial Average rose 341.73 points, or 1.05 per cent, to 33,003.57, the S&P 500 gained 29.96 points, or 0.76 per cent, to 3,981.35 and the Nasdaq Composite added 83.50 points, or 0.73 per cent, to 11,462.98.
Fed funds futures tied to the Fed’s policy rate see about an even chance that the rate will get to a range of 5.5 per cent-5.75 per cent by September, from the current range of 4.5 per cent-4.75 per cent.
At the closing bell, Fed Governor Christopher Waller said a string of “hot” data may force the US central bank to raise rates higher than the 5.1 per cent-5.4 per cent range projected by the majority of Federal Reserve policymakers as recently as December.
Monthly payrolls and consumer prices data in the coming days will offer investors more clues on how aggressive the central bank may be heading into the Fed’s March 21-22 meeting, where it is currently expected to raise rates by 25 basis points.
The S&P 500 was trading just above its 200-day moving average of about 3,940, seen as a key support level by traders, after briefly falling below it for the first time since January 25 earlier in the session.
Salesforce Inc soared 11.50 per cent to notch its biggest one-day percentage gain since August 2020, after the cloud-based software firm forecast first-quarter revenue above analysts’ estimates and doubled its share buyback to US$20 billion.
Tesla Inc fell 5.85 per cent after Chief Executive Elon Musk and team’s four-hour presentation failed to impress investors with few details on its plan to unveil an affordable electric vehicle.
Macy’s Inc jumped 11.11 per cent after the department store operator forecast full-year profit above Wall Street estimates,
Silvergate Capital SI.N plunged 57.72 per cent after the crypto-focused lender delayed its annual report and said it was evaluating its ability to operate as a going concern.
Volume on US exchanges was 11.15 billion shares, compared with the 11.46 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 1.19-to-1 ratio; on Nasdaq, a 1.10-to-1 ratio favoured advancers.
The S&P 500 posted 10 new 52-week highs and 13 new lows; the Nasdaq Composite recorded 80 new highs and 153 new lows. — Reuters
