On Thursday, U.S. stocks showed resilience, with Wall Street bouncing back from earlier losses this week. The S&P 500 climbed 0.7% in early trading, edging closer to its record high set just last week. The Dow Jones Industrial Average also rose, gaining 205 points, or 0.5%, by 9:40 a.m. Eastern time, while the Nasdaq composite was up 0.8%.
Federal Reserve Chair Jerome Powell is set to testify again on Capitol Hill regarding interest-rate policy. The expectation is for him to reiterate his recent statements, indicating that the Federal Reserve may cut its main interest rate this year. However, the Fed is waiting for additional data to confirm a cooling in inflation before making any moves.
The possibility of rate cuts is significant for Wall Street, as it could ease economic and financial pressures. Earlier predictions for rate cuts in March have been pushed back, with many now eyeing June as a more likely timeframe.
In the bond market, Treasury yields eased following reports suggesting a potential easing of inflationary pressures. One report showed a slight increase in U.S. workers applying for unemployment benefits, though the overall number remains low compared to historical data. Another report indicated that U.S. workers were more productive than expected in the last quarter of 2023, which could help the economy grow without stoking inflation.
In Europe, traders are speculating about when the European Central Bank will begin cutting interest rates, following comments from its president about progress in controlling inflation.
The yield on the 10-year Treasury fell to 4.08% from 4.11% late Wednesday, continuing its decline from above 5% last fall. This trend could encourage borrowing and support higher stock prices.
Investors are awaiting the U.S. government’s monthly update on the job market, scheduled for Friday. Traders hope the report will show a healthy job market without deterring the Federal Reserve from cutting interest rates.
In corporate news, American Eagle Outfitters surged 9.5% after reporting better-than-expected profit and revenue for the latest quarter, along with a plan to boost operating profit. Kroger also rose 6.7% after reporting strong profits for the end of 2023 and giving a positive profit forecast for the upcoming year.
However, Victoria’s Secret saw a decline in its stock price despite reporting stronger-than-expected profits. The company’s forecast of overall sales decline for the upcoming year disappointed analysts, leading to a 25.4% drop in its stock price.
Shares of New York Community Bancorp rose 12.4% after the bank announced a lifeline of more than $1 billion from investors. While analysts believe the bank’s issues are specific to it, rather than indicative of broader industry problems, other regional bank stocks have been volatile.
Overall, European markets showed modest gains after the European Central Bank’s decision to maintain its main interest rate. In Japan, the Nikkei 225 index briefly reached a record high before retreating to a 1.2% loss.
Featured Image: Freepik @ wirestock
