With U.S. Rate-Pause Optimism High, Indexes Brave Higher

Barry Adams
12 Jun, 2023
New York City

Stocks traded higher as rate-pause expectations drove trading sentiment. 

Market indexes advanced and investors looked ahead to the release of consumer inflation index on Tuesday and producer price inflation on Wednesday. 

The Federal Reserve is also scheduled to announce its rate decision on Wednesday and investors are divided about the rate path. 

Some investors are hoping that the Fed may pause rate hike at June and July meetings and acknowledge the decline in inflation, while others are looking for the central bank to lift rates higher because inflation is still significantly above 2% target. 

The S&P 500 index crossed 4,300 for the first time since August 2022 and gained for the fourth week in a row. 

The index is likely to advance further if the Fed announces to pause rate hike on Wednesday. 

Despite recent gains in the benchmark index, market rally is driven by few large cap tech companies and caught many investors by surprise amid looming economic slowdown, elevated inflation and corporate earnings recession. 

 

Japan's Wholesale Prices Dropped to 2-year Low 

Japan's wholesale prices rose 5.1% in May, slower than 5.8% in April, the Bank of Japan reported Monday. 

Producer Price index rose at a slower pace for the fifth month in a row and at the slowest pace since July 2021. 

On a monthly basis the producer price index declined 0.7% in May and swung to a decline for the first time since February.   

 

U.S. Indexes & Yields 

The S&P 500 index increased 0.1% to 4,298.17 and the Nasdaq Composite added 0.2% to 13,259.51. 

The yield on 2-year Treasury notes increased to 4.61%, 10-year Treasury notes edged down to 3.74% and 30-year Treasury bonds eased 3.88%. 

Crude oil decreased $1.59 to $68.57 a barrel and natural gas prices decreased 2 cent to $2.23 a thermal unit. 

 

U.S. Stock Movers

Nasdaq Inc declined 8.2% to $53.13 after the exchange operator agreed to acquire financial software developer Adenza from Thoma Bravo for $10.5 billion.

The company plans to pay $5.75 billion in cash and offer 85.6 million Nasdaq shares or about 14.5% of its outstanding shares.  

Illumina, Inc increased 2.9% to $206.50 after the company said chief executive Francis deSouza resigned following pressure from activist investor Carl Icahn.