Thursday, April 07, 2022

DJIA: 34,583.57, up 87.06
S&P 500: 4,500.21, up 19.06
Nasdaq: 13,897.30, up 8.48

Stocks finish higher; yield curve steepens

U.S. stocks turned higher on Thursday, rebounding from a two-day losing streak inspired by a decidedly hawkish tone from Federal Reserve (Fed) policymakers. The Dow climbed 87 points, erasing a nearly 300 point decline seen earlier in the session, while the S&P 500 added 0.4%. The Nasdaq Composite rose 0.1%, but remains on track for a 2.6% weekly drawdown. Treasuries were mixed, with the yield curve steepening. The yield on the 10-year note added four basis points (0.04%) to 2.64%, while the two-year note yield slipped four basis points (0.04%) to 2.45%.

Yesterday’s release of the Fed’s March meeting minutes revealed that officials “generally agreed” to reduce the size of its nearly $9 trillion balance sheet by $95 billion per month. They also set the expectation that upcoming interest rate hikes could come in larger 0.50% intervals as the central bank prioritizes its fight against persistent inflation. Earlier today, St. Louis Fed President Bullard stated that he would prefer to see another 300 basis points (3.00%) in rate hikes by year-end. On the data front, weekly initial jobless claims came in at 166,000, dropping to the lowest level since November 1968.

Seven of 11 S&P 500 sectors finished in positive territory, with Health Care stocks outperforming. In corporate news, HP Inc. jumped 14.7% after Berkshire Hathaway disclosed a 121 million share stake valued at more than $4.2 billion. In earnings, Constellation Brands Inc. gained 4.6% after topping earnings estimates. Packaged food company Lamb Weston Holdings Inc. rose 8% following an upbeat profit tally that included an improving margin outlook.
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