Major indices on the U.S. New York Stock Exchange showed early gains on the 30th (local time) as concerns over the banking sector crisis eased, with investors awaiting the release of the Personal Consumption Expenditures (PCE) price index the following day.
As of 10:03 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was up 110.65 points (0.34%) from the previous close, trading around the 32,828 level. The S&P 500, which focuses on large-cap stocks, rose 25.66 points (0.64%) to about 4,053, while the tech-heavy Nasdaq index gained 99.22 points (0.83%) to reach approximately 12,025.
Currently, all 10 sectors in the S&P 500, except for telecommunications-related stocks, are showing gains. Real estate, technology, and materials sectors are driving the rally. Leading tech stocks such as Amazon and Microsoft are trading about 1% higher than the previous close. Semiconductor stocks are also on the rise, buoyed by positive industry outlooks, with Nvidia (+0.79%), AMD (+2.85%), Intel (+1.36%), and Qualcomm (+1.39%) all gaining. Additionally, UBS Group, which re-hired former CEO Sergio Ermotti ahead of its acquisition of Credit Suisse (CS), rose 3.7% on the New York Stock Exchange. In contrast, Charles Schwab fell more than 3% after Morgan Stanley downgraded its investment rating.
Investors are awaiting comments from Federal Reserve (Fed) officials and upcoming inflation data amid easing concerns about the banking sector crisis. Following the release of unemployment and growth figures on this day, the next day will see the release of the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, as well as the University of Michigan consumer sentiment index. The February PCE price index is estimated to have risen 4.7% year-over-year and 0.4% month-over-month. Michael O'Rourke, chief market strategist at JonesTrading, said, "The market will shift its focus to inflation data over the next few days."
The weekly U.S. initial jobless claims released on this day increased by 7,000 to 198,000 compared to the previous week, exceeding market expectations of 195,000. Some market participants see this unemployment data as a basis for the Fed to adjust the intensity of its tightening. However, claims have remained below 200,000 for three consecutive weeks, maintaining historically low levels.
The U.S. fourth-quarter economic growth rate was slightly revised downward, reflecting weakened consumer spending and export performance. The U.S. Department of Commerce reported that the GDP growth rate for the fourth quarter of last year was 2.6% annualized. This is a further downward revision from the preliminary estimate of 2.9% and the revised estimate of 2.7%. This has led to assessments that the Fed's tightening to reduce inflation is showing policy effects, bolstering expectations that interest rate hikes are nearing their end.
In the afternoon, remarks from Fed officials including Susan Collins, president of the Boston Federal Reserve Bank, Thomas Barkin, president of the Richmond Fed, and Neel Kashkari, president of the Minneapolis Fed, are scheduled. The following day, Fed Governor Lisa Cook and John Williams, president of the New York Fed, are also expected to speak. Investors are likely to seek additional clues about the Fed's future interest rate path from these comments.
Currently, the market is divided between expectations that the Fed will hold rates steady at the May FOMC meeting and those anticipating a baby step (a 0.25 percentage point rate hike). According to the Chicago Mercantile Exchange (CME) FedWatch tool, as of the morning of this day, federal funds futures markets reflect a greater than 52% probability that the Fed will take a baby step at the May FOMC meeting. The probability of a rate hold is 47.5%.
In the New York bond market on this day, U.S. Treasury yields showed a slight increase. The 2-year Treasury yield, sensitive to monetary policy, traded around 4.1%, while the 10-year yield was near 3.58%.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," was trading around 19, about 4% lower than the previous close. The fear index had surged to 30 in mid-March due to the Silicon Valley Bank (SVB) crisis but has since recovered to previous lows. Viraj Patel, global macro strategist at Vanda Research, described it as "a bit of calm after the storm."
European stock markets are also rising. Germany's DAX index is up about 1.1%. The UK's FTSE index and France's CAC index have also gained approximately 0.76% and 1.04%, respectively.
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