Wall Street Gains Momentum on Upbeat Economic Data, Treasury Yields Rise - Market Insights 2024

On Thursday, U.S. stocks exhibited a positive trend, and benchmark Treasury yields saw an uptick following robust labor market data. The S&P 500 and Nasdaq witnessed gains, predominantly driven by the tech sector, while defensive sectors maintained the Dow at a relatively steady level.

A recent report from the Labor Department revealed that initial claims for unemployment benefits have declined to their lowest level since September 2022. This development has cast doubt on the likelihood of the Federal Reserve initiating a cut to its key policy rate in March, as some had previously speculated.

The favorable economic data, coupled with concerns about potential conflicts in the Middle East, contributed to an upward push on Treasury yields. Greg Bassuk, the CEO at AXS Investments, acknowledged the dilemma faced by investors. While a robust economy bodes well for corporations and investors, it dampens expectations of a rate cut in March.

Bassuk emphasized that investors, both bullish and bearish, are closely monitoring economic data, recognizing its significant impact on Fed policy throughout 2024.

According to CME's FedWatch tool, financial markets are now pricing in a 55.7% likelihood of a Fed rate cut in March, down from 70.2% a week earlier.

The Dow Jones Industrial Average experienced a marginal decline of 0.04%, closing at 37,252.18. In contrast, the S&P 500 gained 0.46%, and the Nasdaq Composite added 1.09%.

In European markets, shares gained ground, supported by positive earnings reports, with investors also eagerly awaiting the release of the European Central Bank's policy meeting minutes.

The pan-European STOXX 600 index rose by 0.59%, and MSCI's global stocks gauge gained 0.46%.

Emerging market stocks increased by 0.36%, and MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.38% higher. However, Japan's Nikkei experienced a slight loss of 0.03%.

The robust jobless claims data provided a boost to U.S. Treasury yields, suggesting the Fed might delay rate cuts for a more extended period. Benchmark 10-year notes yielded 4.119%, while the 30-year bond yielded 4.3402%.

The dollar maintained its position near a 5-week peak against a basket of world currencies, with the dollar index rising by 0.02%.

In the commodities market, crude prices advanced as the International Energy Agency (IEA) predicted strong global oil demand for the year. U.S. crude rose to $73.20 per barrel, and Brent reached $78.26.

Gold prices increased due to mounting geopolitical concerns, particularly in the Middle East. Spot gold added 0.4%, reaching $2,013.59 per ounce.

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