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U.S. stocks bounce, investors digest news of 2022 rate hikes

EconomyJan 11, 2022 04:50PM ET
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2/2 © Reuters. FILE PHOTO: Pedestrians wearing face masks walk near an overpass with an electronic board showing stock information, following an outbreak of the coronavirus disease (COVID-19), at Lujiazui financial district in Shanghai, China March 17, 2020. REUTERS/Aly 2/2

By Koh Gui Qing

NEW YORK (Reuters) - U.S. stocks bounced and Treasury yields retreated on Tuesday in choppy trade as investors absorbed remarks from the Federal Reserve that interest rates are likely to rise this year, as expected.

In comments to U.S. lawmakers, Federal Reserve Chairman Jerome Powell said he expected the Fed would raise rates and end its asset purchases this year, but that the central bank had made no decision about the timing for tightening monetary policy.

"Inflation is running very far above target. The economy no longer needs or wants the very accommodative policies we have had in place," Powell said in his testimony.

The Dow Jones Industrial Average closed up 0.51%, the S&P 500 added 0.92%, and the Nasdaq Composite climbed 1.41%.

The pan-European STOXX 600 index rose 0.84% and MSCI's gauge of stocks across the globe gained 0.94%.

"Comments from Fed Chair Jerome Powell reassured investors that the Fed is prepared to tighten monetary policy to maintain price stability," analysts at Australia's ANZ Bank said in a note.

Inflation pressures prompted the Fed in December to flag plans to tighten policy faster than expected, possibly even raising rates in March, though that was before it became clear just how fast the Omicron coronavirus variant would spread.

Some investors were relieved that the Fed did not sound more hawkish than the market had anticipated, and this helped Treasury yields pull back a touch from two-year highs struck earlier.

Benchmark 10-year Treasury yields retreated to 1.741%, after hitting an almost two-year high above 1.8% overnight.

Two-year Treasury yields, which are highly sensitive to interest rates, dipped to 0.8966%, down from a high of 0.945% last seen in February 2020. [US/]

The recovery in risk appetites weighed on the dollar. The dollar index, which measures the currency against a basket of six major currencies, fell 0.34% to 95.614. A softer dollar lifted the euro up 0.3% to $1.13670. [USD/]

The weaker dollar benefited bullion, and spot gold added 1.2% to $1,822.75 an ounce. U.S. gold futures gained 1.34% to $1,822.50 an ounce. [GOL/]

U.S. December consumer inflation data will be released on Wednesday with headline CPI expected to hit a red-hot 7% year- on-year, boosting the case for rates to rise sooner rather than later.

GRAPHIC - Bloomberg Barclays (LON:BARC) index

https://fingfx.thomsonreuters.com/gfx/mkt/egvbkjjqepq/Pasted%20image%201641850886841.png

"We continue to believe liftoff in March is increasingly likely. How these debates are settled will likely have implications for post-liftoff rate hikes," Nomura economists said in a report, referring to U.S. monetary policy.

"In particular, we believe comments regarding earlier runoff and less aggressive rate hikes support our view that the Fed will slow the pace of rate hikes to two per year in 2023."

Oil rose to nearly $82 a barrel, supported by tight supply and hopes that rising coronavirus cases and the spread of the Omicron variant would not derail a global demand recovery.

U.S. crude recently rose 3.82% to $81.22 per barrel and Brent was at $83.72, up 3.52% on the day.

Stronger risk appetites supported bitcoin, which rose 2.1% to $42,722.21, after dropping below $40,000 the previous day for the first time since September.

U.S. stocks bounce, investors digest news of 2022 rate hikes
 

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Comments (24)
Chad RicherThanYou
Chad RicherThanYou Jan 11, 2022 3:39PM ET
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Im sure everything is fine guys. No financial crisis will ever hapoen lets just keep expanding the debt bubble and printing money. This time is different
Mox Mox
Mox Mox Jan 11, 2022 3:39PM ET
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it has worked for the last 13 years. maybe can work a bit longer :-)
Mitchel Pioneer
Mitchel Pioneer Jan 11, 2022 1:50PM ET
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No attempt to hide the fraud and criminal manipulation whatsoever.  Same flagrant activity as yesterday, following the same pattern.  Wall Street is laughing in the face of America as they defraud the US working class in plain view.
jason xx
jason xx Jan 11, 2022 1:50PM ET
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How much did you lose?
Patrick Joly
Patrick Joly Jan 11, 2022 1:50PM ET
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he does not trade at all.
Pól Hansen
Pól Hansen Jan 11, 2022 1:37PM ET
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The market is up m8
Scott Keever
Scott Keever Jan 11, 2022 1:33PM ET
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I'm not sure what's more scripted. Wrestling WWE. Or this lip service!
Scott Keever
Scott Keever Jan 11, 2022 1:33PM ET
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The person that gave me thumbs down must think wrestling is real!
Martin mm
Martin mm Jan 11, 2022 12:58PM ET
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i want this drops everydaayy haha
Archeo Gur
Archeo Gur Jan 11, 2022 12:58PM ET
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High five dudee. Lol
Stan Smith
Stan Smith Jan 11, 2022 12:57PM ET
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Rate cards "on the cards" doesn't mean it will happen. A lot of contrived events can happen between then and now that will halt the hikes.
Ron Love
Ron Love Jan 11, 2022 12:44PM ET
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Who is out there living in the mountains with no newspapers, TV, or internet access that didn’t know Fed rate hikes coming in 2022? Who are these mysterious Amish market makers?
Dave Jones
Dave Jones Jan 11, 2022 12:44PM ET
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IKR! They say the market is forward looking....LMAO
Michael Angelo
Michael Angelo Jan 11, 2022 12:43PM ET
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The "cheer-man" Powell thinks seriously that inflation will go down just threatening with never implemented rate hikes? Or is just giving time to sell? Really is the most pa-the-tic fed chairman I saw.
Vijay Jaiswal
Vijay Jaiswal Jan 11, 2022 12:35PM ET
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pre wrote headlines...hahaha...
Stan Smith
Stan Smith Jan 11, 2022 12:24PM ET
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?? yet Nasdaq is mysteriously soaring on the great news
Eldo Itteera
Eldo Itteera Jan 11, 2022 12:11PM ET
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Ridiculous headline just opposite
vince smith
vince smith Jan 11, 2022 12:10PM ET
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Powell has been saying the same thing over and over again, and doing nothing
Peter ONeill
Peter ONeill Jan 11, 2022 12:10PM ET
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He has millions invested in the stock market as do most of the Fed Reserve board - doesn't want to do anything which might harm his own vast wealth. Doesn't care about person on the street with huge inflation or the next generations who will have to pay trillions back for his printing.
Empire Destroyer
Empire Destroyer Jan 11, 2022 12:10PM ET
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Peter ONeill sounds like every rich person in the world. They compensate for it by donating a little and doing a charity day 🤣
Dave Jones
Dave Jones Jan 11, 2022 12:07PM ET
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rocketing up by the looks....heres the next headline...stocks up due to stocks going up
Umer Hassan
Umer Hassan Jan 11, 2022 12:07PM ET
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Respected! Can you perdict about gold prices after pawel speach
Peter ONeill
Peter ONeill Jan 11, 2022 12:07PM ET
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Or stocks up as Fed has flooded the market with debt. So every dip is still being bought by a huge oversupply of cash floating around. All the hallmarks of a bubble which will burst sooner or later...
Fakhraddin Aliyev
Fakhraddin Aliyev Jan 11, 2022 12:04PM ET
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All will get down tomorrow after cpi
Steffen vdm
Steffen vdm Jan 11, 2022 12:03PM ET
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What numbers am I looking at then?
Antonio Velardo
Antonio Velardo Jan 11, 2022 11:57AM ET
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Stocks up. Not falling. What is this head line?
Craig Garrett
Craig Garrett Jan 11, 2022 11:57AM ET
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Guys, come on. Adjust your headlines before you post the article.
Radium King
Radium King Jan 11, 2022 11:53AM ET
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Sell the rip if you bought the dip.
Dave Jones
Dave Jones Jan 11, 2022 11:53AM ET
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I like it!
Matt Brackley
Matt Brackley Jan 11, 2022 11:51AM ET
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ooooh I guess up is the new down. I identify as confused.
Casador Del Oso
Casador Del Oso Jan 11, 2022 11:49AM ET
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so why are stocks up right now?
darren marshall
darren marshall Jan 11, 2022 11:48AM ET
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lol rallying
JAMES CUNHA
JAMES CUNHA Jan 11, 2022 11:44AM ET
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Stonks appear to be going up as we no longer have free and efficient markets.  Just a market that is blatantly manipulated by financial institutions and the Federal Reserve. If it were a free and efficient market, we wouldn't have an automaker with a market cap over a trillion dollars while manufacturing only a tiny percentage of vehicles.  Unfortunately, we essentially have no real SEC to enforce regulations and the Fed loves pumping money into the equity markets so that they and their friends can financially benefit at the expense of the middle class. smh
hd tv
hd tv Jan 11, 2022 11:44AM ET
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with over 40% of household wealth in equities and another roughly 30% in property. If either bubble was to pop, the economy would most likely go with it. Unfortunately, over the last decade with poor policy and economic management, the US has built an economy that relies on an over inflated market to prop it up.
Edward Chong
Edward Chong Jan 11, 2022 11:43AM ET
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err..... nasdaq is up almost 200???
John robinson
John robinson Jan 11, 2022 11:43AM ET
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yup, this article did not age well..
Mohsen Shahidi
Mohsen Shahidi Jan 11, 2022 7:15AM ET
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pandemics are as governments power to control the world.
 
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