Wall Street shook off worries over the Bank of Japan policy tweak to focus on another round of economic figures pointing to economic resilience and a slowdown in inflation.
(Bloomberg) — Wall Street shook off worries over the Bank of Japan policy tweak to focus on another round of economic figures pointing to economic resilience and a slowdown in inflation.
The S&P 500 advanced after the personal consumption expenditures price index — the measure that the Federal Reserve uses to track its inflation goal — rose the slowest pace in more than two years while consumer spending climbed. The Nasdaq 100 outperformed as Intel Corp. gained after the beleaguered chip pioneer gave a bullish sales forecast. Bond yields fell alongside the dollar.
“Today’s PCE came in softer than expected to top off a full week chock full of economic data that all points to a higher probability of a soft landing,” said Gina Bolvin, president of Bolvin Wealth Management Group. “This could be the catalyst to send the market to new highs.”
In what looked like a “sell the rumor, buy the news” episode, US markets saw a reversal from moves on Thursday, when anxiety was running high in the run-up to the BOJ decision. Governor Kazuo Ueda surprised investors on Friday by announcing the central bank would allow yields to rise above a ceiling it now calls a point of reference. That paves the way for a future normalization of policy that has implications for a wide range of global assets and for markets heavily exposed to Japanese money.
Yields on 10-year Japanese government bonds jumped to their highest since 2014, while the yen seesawed between gains and losses as investors speculated whether this tweak was a precursor to more drastic changes for Japan’s ultra-easy monetary policy.
“Now that BoJ is out of the way, and they got away with their tweak to policy without much carnage in the fixed-income space, we can relax and hop back on board the carry train,” said Brad Bechtel, a strategist at Jefferies. “At least until we start seeing signs of some sort of hard landing scenario show up.”
Corporate Highlights:
- Exxon Mobil Corp. fell short of analysts’ expectations with a third straight drop in profit — the longest decline since the 2014-2016 oil-market crash — amid weaker natural gas prices and shrinking returns from fuel sales.
- Procter & Gamble Co.’s sales and earnings both surpassed analysts’ projections as the maker of Gillette razors reported a boost from higher prices, and strength from its US business.
- Ford Motor Co. expects to see losses from electric vehicles hit $4.5 billion this year, up from an earlier estimate of $3 billion. That’s more than double the $2.1 billion the company lost on EVs last year.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.8% as of 9:31 a.m. New York time
- The Nasdaq 100 rose 1.1%
- The Dow Jones Industrial Average rose 0.6%
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.2% to $1.1001
- The British pound rose 0.5% to $1.2858
- The Japanese yen fell 0.6% to 140.34 per dollar
Cryptocurrencies
- Bitcoin rose 0.5% to $29,277.61
- Ether rose 0.6% to $1,869.46
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.97%
- Germany’s 10-year yield advanced one basis point to 2.48%
- Britain’s 10-year yield advanced four basis points to 4.35%
Commodities
- West Texas Intermediate crude fell 0.6% to $79.61 a barrel
- Gold futures rose 0.4% to $1,993 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck, Tassia Sipahutar and Sujata Rao.
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