The Dow Closes Higher as Fed Hints at Rate Pause
Fresh Federal Reserve Remarks Keep Treasury Yields in Check
The Dow closed higher on Tuesday as the Federal Reserve hinted at another pause on rate hikes next month, which helped to keep Treasury yields in check. This comes as the Fed officials continue to advocate for a wait-and-see approach.
Atlanta Fed President Expects Rates to Remain Steady
Atlanta Federal Reserve President Raphel Bostic expressed his belief that rates do not need to be increased further to combat high inflation. He stated that a significant portion of the rate hikes delivered since March 2022 are yet to have an impact on the economy. This sentiment aligns with market expectations of a rate pause next month.
Minneapolis Fed President Discusses Impact of Treasury Yields
Minneapolis Fed President Neel Kashkari stated that the recent rise in long-term Treasury yields could potentially aid the Fed in its battle against inflation. However, he stopped short of endorsing a rate pause and emphasized that the central bank may need to follow through on market expectations if the rise in yields is driven by expectations of further tightening.
Treasury Yield Curve Unwinds Inversion
The key part of the Treasury yield curve continues to unwind its inversion, easing recession fears. The 2-year rate over the 10-year Treasury rate has narrowed to -29 basis points, the lowest level since March. This positive development indicates improving market conditions.
Microsoft Gains Support from Morgan Stanley, Palantir Secures Contract
Microsoft Corporation received support from Morgan Stanley, which reiterated its confidence in the tech giant. Palantir Technologies Inc also experienced a rise in its stock price after winning a new contract from the U.S. Army worth approximately $250 million.
Boeing Overcomes Delivery Decline
Boeing Co saw a rise in its stock price despite a decline in third-quarter deliveries of new airline jets. The decrease was attributed to ongoing production problems with its 737 MAX jets. In a separate statement, Boeing announced the delivery of 1,000 smart bombs to Israel as part of its collaboration with the country.
PepsiCo Reports Strong Quarterly Results
PepsiCo reported quarterly results that surpassed expectations, leading to a nearly 2% increase in its stock price. The company also raised its annual guidance on earnings, showcasing its continued growth in the market.
Truist Financial Corp Rises on Deal News
Truist Financial Corp experienced a significant increase in its stock price following reports of potential talks to sell its brokerage business to Stone Point, a private equity company. This positive development contributed to the broader financial sector’s rise.
Banks Anticipate Positive Earnings
Banks, including JPMorgan, are expected to release their quarterly earnings soon, leading to increased optimism in the market. The unwinding of the inverted yield curve has also supported the banking sector, as higher long-term rates boost their lending business.
