(Bloomberg) — US stocks continued to gain in Wednesday trading, with traders positive about the economy after a fresh batch of data topped estimates and technology companies reported robust earnings.
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The S&P 500 pushed higher and the Nasdaq 100 rose more than 1%. Netflix Inc.’s shares soared after subscriber numbers surpassed expectations. Meta Platforms Inc. touched a fresh record high, propelling its market value to $1 trillion for the first time since 2021. The US 10-year yield hovered around 4.12%. The Bloomberg Dollar Spot Index fell.
US data showing US business activity expanded in January by the most in seven months is positive for stocks, according to Renaissance Macro’s Neil Dutta.
“Growth is up and inflation is down. The former puts a ceiling on how many cuts the Federal Reserve will do while the latter means the Fed still ends up cutting,” he said. “Very good scenario for equity markets.”
With earnings due later in the day from Tesla Inc. and International Business Machines Corp., the spotlight remains on the tech sector. Even more broadly, the US earnings season so far indicates companies are coping well with higher interest rates.
Fundstrat Global Advisors LLC’s Tom Lee expects a rally to eventually extend beyond just last year’s high-flying tech stocks.
“With Fed signaling future cuts, the 5% earned on money market has a short shelf life,” he wrote in a note to clients. “Thus, we see the $5.5 trillion in money markets moving to equities — of course, not the full balance. But any moves would be positive for stocks and for expanding market breadth.”
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Bank of Canada held its key interest rate at 5%, as expected, and signaled it’s done hiking. Also on the roster this week is European Central Bank’s policy meeting on Thursday.
Euro-area bond yields slipped after data showed business activity contracted in January for the eighth month. Traders are now pricing in 136 basis points worth of interest-rate cuts by year-end, eight basis points more than on Tuesday.
In the UK, inflation concerns were revived by a report showing private sector firms had the sharpest jump in costs in five months, partly due to disruptions from shipping delays in the Red Sea. British 10-year gilt yields hovered around 4% and the pound gained.
Elsewhere, industrial metals prices received a boost after China signaled plans to stimulate its economy by cutting the reserve requirement ratio for banks. The move should allow Chinese banks to step up lending and their purchases of government bonds. The news also supported Brent crude around $80 a barrel.
Key events this week:
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Eurozone ECB rate decision, Thursday
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Germany IFO business climate, Thursday
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US GDP, initial jobless claims, durable goods, wholesale inventories, new home sales, Thursday
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Japan Tokyo CPI, Friday
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US personal income & spending, Friday
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Bank of Japan issues minutes of policy meeting, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.7% as of 10:43 a.m. New York time
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The Nasdaq 100 rose 1.3%
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The Dow Jones Industrial Average rose 0.3%
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The Stoxx Europe 600 rose 1.1%
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The MSCI World index rose 0.1%
Currencies
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The Bloomberg Dollar Spot Index fell 0.5%
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The euro rose 0.5% to $1.0903
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The British pound rose 0.5% to $1.2754
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The Japanese yen rose 1% to 146.80 per dollar
Cryptocurrencies
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Bitcoin rose 2.2% to $40,074.31
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Ether rose 1.6% to $2,237.65
Bonds
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The yield on 10-year Treasuries was little changed at 4.12%
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Germany’s 10-year yield declined three basis points to 2.33%
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Britain’s 10-year yield was little changed at 3.99%
Commodities
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West Texas Intermediate crude rose 0.8% to $74.97 a barrel
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Spot gold fell 0.5% to $2,018.80 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from John Viljoen, Cristin Flanagan, Julien Ponthus, Sujata Rao and Felice Maranz.
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