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Stocks rally, U.S. yields flat on hopes for central banks pause

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  • Markets confirm Fed, BoE and ECB rate hike cycles are coming to an end
  • Dollar bounces after largest daily percentage drop in a month

NEW YORK (Reuters) – Global stock indices rose for a second day in a row and long-term Treasury yields were flat on Thursday. Policy announcements by many central banks have fueled optimism about the interest rate cycle. You may be nearing the end of your hiking cycle.

Fed Chairman Jerome Powell acknowledges that a ‘disinflationary’ process may have begun after the Federal Reserve hiked interest rates by 25 basis points (bps) on Wednesday, as widely expected. Markets have rebounded.

The European Central Bank (ECB) and Bank of England (BoE) each hiked rates by 50 basis points on Thursday. The BoE shows that the tide is turning against inflation, and the ECB shows that at least one more rate hike is on the horizon.

Reuters Graphics

On Wall Street, the S&P 500 and Nasdaq rallied, with the S&P 500 hitting intraday highs since Aug. 26, the Nasdaq reaching its highest since Sept. 12, and Facebook parent company Meta Platforms Inc. boosted from a 27.06% surge in (META.O) Following the announcement of quarterly results and a $40 billion share buyback.

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“The market outlook is different. Judging by past forecasts, the Fed is pretty bad. And they know the economy is slowing,” said Steven Blitz, chief US economist at TS Lombard. But the Fed chairman never says these things,” said Reuters Global Markets Forum.

“So the market sees through this and after being duped in 2021 into believing there will be no rate hike until 2024, they will not be fooled into believing there will be no rate cut until 2024.”

Dow Jones Industrial Average (.DJI) The S&P 500 fell 37.98 points (0.11%) to 34,054.98. (.SPX) Up 68.63 points, or 1.67% to 4,187.84, the Nasdaq Composite (.IXIC) Added 426.53 points to 12,242.85, or 3.61%.

On the economic front, initial weekly unemployment claims fell to a nine-month low, suggesting that while the labor market remained strong, worker productivity accelerated in the fourth quarter. increase. Investors will look to his January payroll report on Friday for further signs of strength in the labor market.

After the closing bells, earnings from heavyweight Apple Inc (AAPL.O) and Amazon.com Inc. (AMZN.O) is scheduled to be released. With 46% of the S&P 500 reporting results, earnings for the quarter are expected to decline from the year-ago quarter, compared to a 1.6% decline expected at the beginning of the year, according to Refinitiv data.

European stocks also jumped, with the STOXX 600 closing at its highest level since April 21, recording its biggest one-day percentage gain in a month.

Pan-European STOXX 600 Index (.STOXX) rose 1.35%, while the MSCI global stock index rose to (.MIWD00000PUS) increased by 1.31%. The MSCI index reached its highest intraday level since May 5, marking his ninth rise in the last 10 sessions.

The benchmark 10-year bond remained unchanged at 3.398% after the previous yield drop.

However, the dollar rallied from Wednesday’s biggest daily percentage drop in almost a month, and the euro also fell on the ECB’s announcement.

The Dollar Index gained 0.674% and the Euro fell 0.64% to $1.0919.

The Japanese yen gained 0.34% against the US dollar to 128.51 per dollar. Meanwhile, Sterling last traded at his $1.2249, and he is down 1.03% on the day.

In commodities, oil prices were slightly higher, with US crude recently gaining 0.37% to $76.69 a barrel and Brent gaining 0.18% to $82.99.

Reporting by Chuck Mikolajczak. Additional reporting by Karen Brettell and Lisa Pauline Mattackal.Editing: Jonathan Ortiz, Chizuru Nomiyama

Our criteria: Thomson Reuters Trust Principles.

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