(Bloomberg) -- The stock market saw a rebound Thursday, with banks halting their selloff and traders piling into some of the world’s largest technology companies that are seen by many investors as a kind of shelter in times of stress and economic uncertainties.
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A rally in megacaps like Apple Inc. and Microsoft Corp. drove the Nasdaq 100 up about 2%, with the gauge close to the threshold of a bull market after surging almost 20% from its December low. Block Inc. tumbled as Hindenburg Research said it’s betting on a decline in the payments-company stock. First Republic Bank led gains in regional peers, snapping back from a plunge that followed disappointing comments from Treasury Secretary Janet Yellen over bank deposits.
“Bottom line, the late-day selloff in equities yesterday was once again led by bank stocks after Treasury Secretary Yellen pushed back on the idea of expanded deposit insurance levels and today, that means bank stocks will again be in focus,” said Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “If banks are able to stabilize, stocks broadly should be able to as well, but if we see more selling pressure, expect more volatility over the course of the day.”
Investors are convinced the Federal Reserve will hike again this year and won’t pivot to monetary easing until 2024. That’s the dominant view of about 350 respondents to an Instant MLIV Pulse survey in the hours following the central bank meeting on Wednesday. Over 70% of them said the Fed isn’t done with tightening policy yet.
Swap traders see about a 50% chance that the Fed won’t raise rates again after it hiked by 4.75 percentage points in the past year.
Bond-Market Message
The bond market stabilized Thursday after a surge that sent Treasury yields plummeting in the aftermath of the Fed decision. Two-year rates edged lower to about 3.9%.
A recession is certain and so are rate cuts this year. That’s the message from the bond market metric Fed Chairman Jerome Powell highlighted a year ago as the best guide to tip-off economic troubles in the US. The expected three-month T-bill rate in 18 months’ time dropped to 134 basis points under the current rate. That’s below the previous record nadir it hit in January 2001 — about two months before the US economy fell into recession.
“The push-and-pull between financial market stability and inflation that is receding more slowly than anyone would prefer will further complicate an already significant challenge for the Fed, increasing the risk of a policy misstep and keeping the door open for a potential recession on the horizon,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
Applications for US unemployment benefits unexpectedly eased for a second week, underscoring a still-tight job market in which employers are reluctant to reduce headcount. Sales of new US homes unexpectedly rose in February after a downward revision to the prior month, suggesting the housing market is beginning to stabilize after a tumultuous year.
Elsewhere, the Bank of England pushed ahead with another interest rate increase despite turmoil in the banking sector, predicting the UK economy will avoid a recession for now and that inflation remains a risk. The pound rose, and investors priced in more certainty of at least one more rate hike later this year.
Key events this week:
Some of the main moves in markets:
Stocks
The S&P 500 rose 1.1% as of 10:33 a.m. New York time
The Nasdaq 100 rose 1.9%
The Dow Jones Industrial Average rose 0.8%
The Stoxx Europe 600 fell 0.4%
The MSCI World index rose 1%
Currencies
The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.3% to $1.0891
The British pound rose 0.4% to $1.2313
The Japanese yen rose 0.2% to 131.12 per dollar
Cryptocurrencies
Bitcoin rose 0.1% to $27,427.39
Ether rose 0.8% to $1,751.9
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.46%
Germany’s 10-year yield declined 11 basis points to 2.22%
Britain’s 10-year yield declined seven basis points to 3.38%
Commodities
West Texas Intermediate crude was little changed
Gold futures rose 1.9% to $2,003.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from John Viljoen, Angel Adegbesan, Isabelle Lee and Carly Wanna.
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https://news.google.com/rss/articles/CBMiUGh0dHBzOi8vY2EuZmluYW5jZS55YWhvby5jb20vbmV3cy9hc2lhbi1zdG9ja3MtZmFjZS1wcmVzc3VyZS1ib25kLTIyMjUxNzIzMS5odG1s0gFYaHR0cHM6Ly9jYS5maW5hbmNlLnlhaG9vLmNvbS9hbXBodG1sL25ld3MvYXNpYW4tc3RvY2tzLWZhY2UtcHJlc3N1cmUtYm9uZC0yMjI1MTcyMzEuaHRtbA?oc=5
2023-03-23 13:57:12Z
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