Stocks rose modestly on Monday as traders weighed comments from Federal Reserve officials on the path for interest rates.[0] The Dow Jones Industrial Average gained 0.1%, the S&P 500 rose 0.1%, and the Nasdaq Composite reversed down 0.1%.[1] Tesla (TSLA) fell 2%, and Dexcom (DXCM) dropped 7.9%.[2]
The yield on the 10-year Treasury note declined by 4 basis points to 3.94%, while the yield on the 2-year Treasury note dropped by 2 basis points to 4.87%.[3] Shares of Ciena (CIEN) rose 6% following the announcement of its fiscal-Q1 results, which were better than[2] Apple (AAPL) gained nearly 2% on Monday as Goldman Sachs initiated coverage with a buy rating.[4]
The Fed is set to begin two days of congressional testimony Tuesday, where Chair Jerome Powell will have the chance to explain the central bank’s planned response to a more resilient economy.[5] Last month, the Fed raised rates by a quarter-percentage-point, and investors will be looking for clues as to the amount of the hike at this month’s March 21-22 meeting.[5] As per the CME’s FedWatch Tool, traders are currently offering odds of 69% that the next meeting will result in a quarter-percentage-point rate hike.[6]
On Thursday, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, expressed his preference for “steady” quarter-point rate increases to reduce potential risks to the economy, noting that the effects of the rate hikes may not be felt until the spring.[7] He added that the Fed might be able to pause rate increases by mid- or late-summer.[7] He cautioned that if inflation figures were higher than expected, it could influence Fed policy.[7] Also, Fed Governor Christopher Waller said a string of “hot” data might force the U.S. central bank “to raise interest rates even more.”[7]
Raphael Bostic, President of the Atlanta Federal Reserve, suggested that interest rates should be increased beyond 5%.[3] As part of an online essay, he added that the key rate would have to be held there until “well into 2024.”[3]
Overall, stocks appear to be taking policymaker comments into account, with the Dow Jones Industrial Average bouncing 1.75% in last week’s stock market trading and the S&P 500 and Nasdaq both rising 1.9% and 2.
0. “U.S. Stocks Give Up Much of Early Gains” The Wall Street Journal, 6 Mar. 2023, https://www.wsj.com/articles/global-stocks-markets-dow-update-03-06-2023-e25e7d66
1. “Dow Jones Rises As Treasury Yields Extend Losses; Tesla Stock Falls On Price Cuts” Investor’s Business Daily, 6 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fall-as-treasury-yields-extend-losses-apple-rallies-on-buy-rating/
2. “Stocks Rise On Strength In Apple And Lower Bond Yields” Barchart, 6 Mar. 2023, https://www.barchart.com/story/news/14813192/stocks-rise-on-strength-in-apple-and-lower-bond-yields
3. “S&P 500, Dow, Nasdaq slump again on ongoing Fed concerns” Seeking Alpha, 1 Mar. 2023, https://seekingalpha.com/news/3942838-sp-500-dow-nasdaq-slump-again-on-ongoing-fed-concerns
4. “Stock market news today: Stocks pare gains, finish mixed to start busy week” AOL, 6 Mar. 2023, https://www.aol.com/stock-market-news-today-stocks-123642555.html
5. “Futures: Will Powell Testimony Threaten Stock Market Rally?” Investor’s Business Daily, 7 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-will-powell-testimony-threaten-stock-market-rally-apple-tesla-in-focus
6. “Dow Jones Fades Ahead Of Powell Testimony; Ferrari Overtakes Tesla As Leader; Apple Pops” Investor’s Business Daily, 6 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-fades-ahead-of-key-powell-testimony-ferrari-stock-overtakes-tesla-stock-as-leader-tests-entry
7. “Stock Index Futures Move Higher As Dovish Fed Comments Boost Hopes Of Fed Pivot” Barchart, 3 Mar. 2023, https://www.barchart.com/story/news/14739365/stock-index-futures-move-higher-as-dovish-fed-comments-boost-hopes-of-fed-pivot