US Stocks Set for an Eight-Week Bull Run on Expectations of Rate Cuts
(Bloomberg) — US stocks are on track for an eight-week bull run after a reading of a key US inflation gauge reinforced Wall Street’s conviction in rate cuts as soon as March.
The S&P 500 rose 0.3% after the latest data largely met expectations. The benchmark is on pace for an eight-week winning streak — the longest in more than five years. The Nasdaq 100 is ready to notch a similar run.
Swaps traders are betting interest rates will be eased by as much as 155 basis points next year, double the Fed’s forecast. Data showing the US core personal consumption expenditures price index — the Fed’s preferred core inflation metric — fell to 3.2% last month, helped cement those bets. Economists surveyed by Bloomberg predicted the gauge would slip to 3.3% in November.
Among equity-market movers, Nike Inc., fell as much as 12% in New York trading, after the sports apparel maker said it’s looking for as much as $2 billion in cost savings amid a weaker sales outlook.
Treasuries also extended a weekly advance by a narrow margin with the yield on the US 10-year bond sliding two basis points.
“We’ll argue the market was biased for a downside surprise which has translated to a somewhat counterintuitive price response” Ben Jeffrey of BMO Capital Markets wrote. “We expect the proximity to the early close and long weekend will usher in a long winter’s nap for Treasuries.”
The core PCE readout was among the last US dataprints before the long Christmas weekend, alongside figures on new home sales, also due later Friday.
The US dollar trades at five-month lows against its Group-of-10 rivals at the prospect of near-term rate hikes.
Oil prices extended their biggest weekly gain in two months, as shippers took lengthy detours to avoid militant attacks in the Red Sea. Brent crude futures traded near $80 a barrel, set for a weekly gain of almost 5%.
Key events this week:
US personal income and spending, new home sales, durable goods, University of Michigan consumer sentiment index, Friday
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.3% as of 9:35 a.m. New York time
The Nasdaq 100 rose 0.3%
The Dow Jones Industrial Average was little changed
The Stoxx Europe 600 rose 0.2%
The MSCI World index rose 0.3%
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.2% to $1.1034
The British pound rose 0.3% to $1.2727
The Japanese yen was little changed at 141.98 per dollar
Cryptocurrencies
Bitcoin fell 1.1% to $43,502.51
Ether rose 2.6% to $2,306.59
Bonds
The yield on 10-year Treasuries declined two basis points to 3.87%
Germany’s 10-year yield was little changed at 1.96%
Britain’s 10-year yield declined two basis points to 3.50%
Commodities
West Texas Intermediate crude rose 1.2% to $74.78 a barrel
Spot gold rose 1% to $2,066.61 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sujata Rao, Divya Patil and Michael Msika.
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