U.S. Market Averages Extend Rally On Hopes of Rate Stability

Barry Adams
06 Nov, 2023
New York City

Stocks on Wall Street edged higher, and bond yields drifted lower after interest rate uncertainties eased.

Benchmark indexes advanced in Monday's trading following stronger-than-expected earnings, and investors searched for bargains in recently beaten-down tech and financial sectors.

The S&P 500 index and the Nasdaq Composite advanced 5% in the previous week, the best weekly gains since November 2022.

Investors returned to add stock exposure in the hopes that the Federal Reserve is done raising interest rates for now and may hold rates for the third time at the next and final rate-setting meeting on December 13.

Market sentiment was bolstered after the 10-year Treasury note yield trended lower from the 16-year high of 5% after expectations rose that the Federal Reserve would hold rates steady till the first two-day meeting of 2024 ending on January 31.

Last week, a softer increase in nonfarm payroll in October supported the Fed's case for a rate hike pause. further emboldening investors to increase stock exposure.

Benchmark indexes advanced for the fifth day in a row on stable rates, improving earnings, and stronger-than-expected economic growth driven by resilient consumer spending and not-too-tight labor conditions, which are also supporting the rise in stock market indexes.

 

U.S. indexes and Yields

The S&P 500 index increased 0.2% to 4,295.13, and the Nasdaq Composite advanced 0.2% to 13,232.06.

The yield on 2-year Treasury notes increased to 4.88%, 10-year Treasury notes inched higher to 4.60%, and 30-year Treasury bonds edged down to 4.78%.

Crude oil increased $0.93 to $81.55 a barrel, and natural gas prices fell 16 cents to $3.43 a thermal unit.

Gold decreased $7.84 to $1,985.03 an ounce after bond yields edged lower and the dollar weakened.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.95.

 

U.S. Stock Movers

Citigroup added 0.1% to $42.31, and the bank is looking to trim as many as 10,000 jobs from its total payroll of 240,000.

The news was first reported by CNBC without naming sources.

Berkshire Hathaway Class B increased 0.6% to $353.99 after the reinsurance insurance-anchored diversified conglomerate reported a surge in quarterly profits.

Operating earnings in the third quarter increased 40% to $10.76 billion from $7.6 billion, driven by a sharp increase in its insurance business.

Insurance underwriting swung to a profit of $2.4 billion from a loss of $1.07 billion, and insurance investment income soared to $2.5 billion from $1.4 billion a year ago.

Investment income jumped after interest rates jumped in the twelve-month period to the end of the third quarter, after the Federal Reserve carried out its aggressive rate hike campaign between March 2022 and June 2023.

Total revenues increased to $93.2 billion from $76.9 billion, net loss attributable to shareholders increased to $12.7 billion from $2.7 billion, and diluted loss per Class A share increased to $8,824 from $1,907 a year ago.

Based on GAAP accounting, net income also reflected the quarterly unrealized investment losses of $29.8 billion compared to $13.5 billion in the corresponding quarter a year ago.

Cash and equivalent securities held by the company at the end of September jumped to $157.2 billion from $128.5 billion a year ago.