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Stock Market Today: Dow closes higher as Fed speakers fuel rate pause bets

Published 10/11/2023, 04:24 AM
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Investing.com -- The Dow closed higher Tuesday as fresh Federal Reserve remarks hinting at another pause on rate hikes next month kept a lid on Treasury yields. 

The Dow Jones Industrial Average rose 0.6%, 185 points, Nasdaq gained 0.8, and the S&P 500 rose 0.7%. 

Fed officials continue to tout wait and see approach  

Atlanta Federal Reserve President Raphel Bostic added to expectations that the Fed will hold rates steady next month, saying “a lot” of the 11-rate hikes delivered since March 2022 are yet to filter through the economy.

"I actually don't think we need to increase rates anymore" to get too-high inflation back down to the Fed's 2% goal," Bostic told the American Bankers Association on Tuesday.

About 13% of traders expect the Fed to hike in November, down from 31% last week, according to Investing.com's Fed Rate Monitor Tool.  

Minneapolis Fed President Neel Kashkari on Tuesday echoed the remarks from Bostic, saying it was "possible" that the recent rise in long-term Treasury yields -- which has tightened financial conditions -- could aid the Fed in its battle against inflation.

"It's certainly possible that higher long-term yields may do some of the work for us in terms of bringing inflation back down," Kashkari said, though stopped short of endorsing a rate pause. If the recent rise in long-term yields have been driven by expectations for further Fed tightening, then the central bank may have to follow through on those expectations, he added.

The key part of Treasury yield curve continue to unwind its inversion amid easing recession fears, with the 2-year rate over the 10-year Treasury rate narrowing to -29 basis points, the lowest level since March and well above the trough of -106 bps seen in the summer.  

Microsoft gains on Morgan Stanley backing, Palantir rises on contract win

Microsoft Corporation (NASDAQ:MSFT) gave up gains despite Morgan Stanley reiterating the tech giant remains a top pick amid optimism over its strength in its artificial intelligence, cybersecurity, and cloud businesses.

Palantir Technologies Inc (NYSE:PLTR) rose 1% after the data software won a new contract from the U.S. Army worth about $250 million.

Boeing rises despite slip in Q3 deliveries

Boeing Co (NYSE:BA) rose more than 3% even as the aircraft maker reported a decline in the third-quarter deliveries of new airline jets amid ongoing production problems with its 737 MAX jets.

The company delivered 105 airplanes in the third quarter, down from 112 jets in the same period a year earlier.

In a separate statement, Boeing (NYSE:BA) said it delivered 1,000 smart bombs to Israel as the latter’s steps up its retaliation against Hamas.

PepsiCo shines on earnings stage

PepsiCo (NASDAQ:PEP) added nearly 2% after reporting quarterly results that beat on both the top and bottom lines. The snacks and beverage company lifted its annual guidance on earnings to 13% from 12% previously.

The upgraded guidance from Pepsi “will mark the third consecutive year of digital digit EPS growth, outpacing its HSD long-term target,” Wedbush said in a note.

Truist leads jumps on deal news; Banks higher ahead of earnings later this week

Truist Financial Corp (NYSE:TFC) rose more than 6% to lead the broader financials sector higher after Semafor reported that the firm is in talks to sell its brokerage business to private equity company Stone Point for about $10 billion.

The rally in banks come just as JPMorgan and other Wall Street banks are set to kickoff the quarterly earnings season in earnest on Friday.

Sentiment on banks have also been supported by the unwinding of the inverted yield curve as the rise in longer-term rates, boosts banks' lending business as they tend to borrow money at the short end of the curve and lend long.

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