(Bloomberg) — US stocks held onto gains after Thursday data signaled the economy was headed in the right direction, cementing bets on prospective interest rate cuts from the Federal Reserve.
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The Nasdaq 100 index pared an over 1% advance, after Wednesday’s bout of selling knocked it off record highs. The S&P 500 rose 0.7%. Bonds slid with the rate on the US two-year around 4.35% while the 10-year rose to 3.88%.
Gross domestic product was revised lower to a 4.9% annualized rise in the third quarter, trailing economists’ projections, the government’s third estimate of the figures Thursday showed. Initial applications for US unemployment insurance rose last week by less than forecast, remaining near historic lows.
Numbers “were still in line with the narrative that a cooling economy will keep the Fed on track to cut rates in the not-too-distant future,” Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley, said. “Right or wrong, that sentiment has played a big role in the market’s recent surge, even though the Fed has been doing its best to temper expectations.”
Among the top gainers were Micron Technologies Inc. and Cintas Corp., which both rose more than 6% after forecast-beating quarterly revenue. Salesforce Inc. was lifted by Morgan Stanley’s prediction the software firm would soar to a record.
Some market watchers blamed Wednesday’s swoon in US stocks on so-called zero-day, or ODTE, options, noting that hefty “put” volumes likely led option holders to dump the underlying equities. But the broader picture of slowing inflation and rate-cut bets mean such speed bumps will be short-lived, many argue.
Citigroup Inc. strategists advised buying into pullbacks, adding investors should “expect volatility ahead, but with an eventual Fed pivot as a north star.”
Philadelphia Fed President Patrick Harker added to the rate-cut conviction Wednesday, saying it’s important that interest rates head lower, though he cautioned the central bank should not move too fast and not “right away.”
Nike Inc.’s earnings, due after market close should provide insights on the state of US consumers. Friday brings UK GDP data, US consumer sentiment and so-called core personal-consumption expenditures price index — the Fed’s preferred inflation gauge.
In commodities, oil prices retreated after three days of gains, as surging US production tempered the threat of Houthi attacks on ships in one of the world’s most important waterways.
The US dollar resumed a slide, falling against all of its Group-of-10 peers Thursday.
Key events this week:
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Nike earnings, Thursday
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Japan inflation, Friday
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UK GDP, Friday
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US personal income and spending, new home sales, durable goods, University of Michigan consumer sentiment index, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.6% as of 10:10 a.m. New York time
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The Nasdaq 100 rose 0.6%
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The Dow Jones Industrial Average rose 0.5%
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The Stoxx Europe 600 fell 0.4%
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The MSCI World index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.4%
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The euro rose 0.3% to $1.0977
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The British pound was little changed at $1.2646
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The Japanese yen rose 0.7% to 142.56 per dollar
Cryptocurrencies
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Bitcoin rose 0.4% to $43,606.69
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Ether rose 1.9% to $2,220.55
Bonds
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The yield on 10-year Treasuries advanced four basis points to 3.88%
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Germany’s 10-year yield advanced two basis points to 1.99%
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Britain’s 10-year yield advanced four basis points to 3.57%
Commodities
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West Texas Intermediate crude fell 1.1% to $73.44 a barrel
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Spot gold rose 0.3% to $2,038.33 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao and Chiranjivi Chakraborty.
(A previous version corrected GDP data.)
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