As investors approached the end of a strong quarter, Wall Street rose, while the dollar weakened due to statistics suggesting success in the Federal Reserve’s attempts to control inflation.
The three main U.S. stock indices all experienced a significant increase and were expected to increase on a weekly, monthly, and quarterly basis.
Ryan Detrick, chief market strategist at Carson Group in Omaha commented, “Nasdaq and large cap technology names had one of the best starts to a year ever, but let’s not forget they were the hardest hit group in the cruel bear market of 2022.”
The S&P 500 has increased by 16% in the first half of 2023, while the tech-heavy Nasdaq Composite has surged over 32%, marking its biggest performance in four decades as it rides the artificial intelligence wave.
The Nasdaq 100 is anticipated to increase by around 39%, marking its largest first-half gain ever.
Sam Stovall, chief investment strategist of CFRA Research in New York said that the market continued to climb a wall of worry fueled by optimism around AI. According to him AI also represents a newer growth drive in a premier growth sector.
The Personal Consumption Expenditures (PCE) report from the Commerce Department showed inflation lesser than expected in May, while consumer spending abruptly decelerated,thus proving that the Fed’s barrage of rate hikes are having their desired effect.
Since the Fed has stated that they intend to hike rates in July, Stovall continued, “but they also remind us that they’re data dependent.” “If the data keep softening, I believe the Fed will decide to end their rate hike programme after this upcoming meeting,” the author said.
According to CME’s FedWatch tool, financial markets continue to assign an 87% likelihood that the Federal Open Market Committee will carry out another 25 basis point rate hike following its July policy meeting.
The S&P 500 increased by 59.11 points, or 1.34%, to 4,455.55; the Dow Jones Industrial Average increased by 331.14 points, or 0.97%; and the Nasdaq Composite increased by 210.96 points, or 1.55%, to 13,802.29.
As waning expectations for China’s post-COVID recovery and continued worries over restrictive central bank policies slowed down an equity run that started earlier in the year, European stocks closed higher, recording a 0.9% gain for the quarter.
The global stock market index MSCI increased 1.14% and the pan-European STOXX 600 index increased 1.16%.
Stocks in emerging markets increased by 0.35 percent. While Japan’s Nikkei fell 0.14%, MSCI’s largest index of Asia-Pacific shares outside of Japan ended the day 0.27% higher.
After two days of gains thanks to the strong PCE report that sparked hope that the Fed’s tightening cycle was coming to an end, the dollar fell versus a basket of other currencies.
The euro increased by 0.44% to $1.0912 while the dollar index decreased by 0.44%.
Sterling was last trading at $1.2698, up 0.68% on the day, while the Japanese yen gained 0.36% to 144.25 per dollar.
On the back of weaker-than-expected consumer spending figures, U.S. Treasury yields dipped.
The yield on benchmark 10-year notes last increased 11/32 from late on Thursday to 3.8112%.
The 30-year bond’s price last increased by 33/32 to 3.8514% yield from 3.912% late on Thursday.
Following the positive PCE report, crude prices broke a three-day losing skid.
U.S. crude increased 1.12% to conclude at $70.64 a barrel, while Brent increased 0.75% to close at $74.90 per barrel.
In opposition to the weakening dollar, gold prices increased, but they were still headed for their first quarterly fall in three.
An ounce of spot gold increased by 0.6% to $1,919.23.