US stocks rose and government bond yields soared on Tuesday as investors digested the more aggressive tone of Federal Reserve Chairman Jerome Powell.
The Dow Jones Industrial Average rose 157 points (0.4%) shortly after the opening bell. The S & P 500 also rose 0.4% and the Nasdaq Composite index rose 0.4%. After Powell said, major US stock indexes fell on Monday. The Fed was ready to raise interest rates If necessary to control inflation, take half a percentage point step.
In the US Treasury market, government bond sales have surged, with 10-year Treasury yields rising from 2.315% on Monday to 2.364%. Benchmark note yields have revolved around the highest yields since May 2019, before the Covid-19 pandemic disrupted financial markets. Yields go up as bond prices go down.
Investors are responsible for stocks, bonds, commodities and currencies Russian war in Ukraine.. Today, many investors are afraid that the war could sustain inflation and impede economic growth in the United States and Europe.
But this week, investors were thrown a new curve ball when Powell spoke on Monday and hit a tougher tone than the Fed used. Raised interest rates from near zero last week. He emphasized the uncertainties faced by central banks, stating that the Fed will move to a more restrictive stance as needed, and that authorities are ready to move policy in a more destructive direction. rice field.
Comments urged some analysts and investors to reassess interest rate expectations. Goldman Sachs Group economists said in a post-powell note that they expect a half-percentage increase at the Fed’s May and June meetings. This is compared to the expected increase of a quarter percentage point in both previous meetings.
“Message from [Fed] Last week’s meeting is that they will be tightened [monetary policy] But the US economy is resilient enough to withstand it, “said Huw Roberts, Head of Analysis at data analytics firm Quant Insights. “The stock market has chosen to emphasize the resilience part of the economy.”
Monday’s comments rocked some of those expectations, he said, and raised fears that the Fed could be tightened faster as the economy slows. “The big variable now is the economic growth aspect of things,” Roberts continued.
Many investors measure the spread between short-term and long-term interest rates and carefully watch the so-called yield curve, which is often seen as a strong indicator of sentiment about the outlook for economic growth.Recently, the yield gap between short-term government bonds and long-term government bonds ShrinkingStirs anxiety that bond markets are approaching signs of a potential recession.
The Treasury yield for two years, which is particularly sensitive to changes in monetary policy, rose from 2.132% on Monday to 2.179% on Tuesday.
To better read the US economic situation, Tuesday morning investors analyze data from the Federal Reserve Bank of Richmond on manufacturing activities. Economic data scheduled for 10 am ET is expected to record an increase from the previous month.
In the morning transaction in New York, the bank’s share rose and followed a similar move in Europe. In the United States
When
Each has been added over 0.8%. In Europe
0.9% advanced
I jumped 3.6%.
In other sectors
After reporting revenue, progressed 6.7% Exceed analysts’ expectations..Share
It fell 7.4% after posting a screenshot showing that the hacking group accessed Okta.com admins and other systems.The company is on Tuesday No evidence found in preliminary investigation Screenshots describe malicious activity, adding that it is likely related to a security incident in January.
In the energy market, international benchmark Brent crude futures rose 0.7% to $ 116.43 a barrel. Last week, Brent prices fell below $ 100 before reversing and rising. Support for Russia’s oil purchase ban across the European Union It is growing within the block and may become even more volatile in the future.
In the crypto market, Bitcoin traded at around $ 42,896, up about 4.2% from the ET level at 5 pm on Monday. Cryptocurrency prices fluctuated sharply during the last month, but have been trading primarily above $ 40,000 since the middle of last week.
In Europe, Pangea’s Stocks Europe 600 has increased by 0.5% to the pace of rising five times in a row.
In Asia, key indices have also risen significantly. The Hang Seng Index in Hong Kong rose about 3.2% and the Nikkei 225 in Japan rose 1.5%. China’s Shanghai Composite rose 0.2%.
Write to Caitlin McCabe at [email protected]
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