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Stocks make gains as investors bet on smaller Fed rate rise

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US stocks rallied on Monday, increasing investors’ confidence that the Federal Reserve will slow the pace of rate hikes at next week’s meeting.

Wall Street’s blue chip S&P 500 rose 1.2%, with all sectors except energy closing in positive territory. Advanced Micro Devices, Qualcomm and Nvidia rose 9.2%, 6.6% and 7.6% respectively after Barclays raised its semiconductor group price target.

The Nasdaq Composite of tech stocks rose 2%. Spotify’s stock jumped as much as 6.4% after the music streamer announced he would cut 6% of his workforce. Large cut series latest work Published by the Advanced Technology Group. It then closed 2.1% higher.

“The market is taking a risk-on approach right now and we see a soft landing and a more positive outlook for interest rates and inflation,” said Neil Birrell, chief investment officer at Premier Myton on Monday. “The Barclays memo was very influential,” Birrell added of the chip maker’s massive rise. “They were big bears, so being positive is a big change.”

The move comes after Fed President Christopher Waller fell 0.25 points below his weight last week. rising interest rates Despite warnings at the U.S. central bank’s next policy meeting in early February that it would take “a considerable amount of time” for inflation to return to 2%, the Fed reduced borrowing costs to 0.5 at its last meeting in December. I raised my points.

Waller’s comments sent the S&P 500 up 1.9% on Friday, but data points to a slowdown in U.S. retail sales in December and weekly unemployment claims hit a four-week low The index fell over the course of last week on the back of the data.

The former suggests a slowdown in economic growth, while the latter suggests a resilient labor market. Dallas Fed President Rory Logan said last week that the outlook for inflation “depends on how much and how quickly” the persistently tight labor market eases.

Nonetheless, the stock market is off to a strong start to 2023 despite mixed results in the fourth quarter. According to senior analyst Vladimir Oleynikov, the S&P 500’s consensus earnings forecast for the last three months of last year has been steadily declining and is now down 2.8% year-on-year, up from an expected growth of 10.6 in July. declining from %. at Generali Investments.

“Weaker [dollar] It supports corporate profitability, but is unlikely to offset the impact of a weakening economy,” he said. is one of

A measure of the dollar’s strength against a basket of six other currencies rose 0.1% after falling 0.3%. Global de facto reserve currencies have fallen 8.2% over the past three months. This is partly due to China’s recent withdrawal of its draconian zero-coronavirus policy, boosting global growth forecasts and making the dollar less attractive.

US Treasuries came under pressure on Monday, with the benchmark 10-year US Treasury yield rising 0.04 percentage points to 3.52%. The equivalent German Bund yield was slightly higher at 2.21%. Bond yields move inversely with prices.

Europe’s Stox 600 was up 0.5%, Germany’s Dax was up 0.4% and London’s FTSE 100 was up 0.2%.The index has risen 5.9 per cent, 7.2 per cent and 3.1 per cent respectively so far this year, reflecting lower energy prices and Recession risks recede across the Eurozone 2023.

In Asia, Hong Kong’s Hang Seng Index rose 1.8% and China’s CSI 300 rose 0.6%. Japan’s Nikkei 225 index rose 1.3%.

The international oil benchmark, Brent crude, rose 0.6% to $88.19 a barrel from around $82 in early January.

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