ECONOMY

Stocks Edge Up After Nasdaq Hits Record

The S&P 500 rose Wednesday, adding to the earlier gains for stocks this week.

The broad U.S. stock index rose 0.1%, hovering slightly below its record close from last week. The tech-heavy Nasdaq Composite advanced 0.2%, a day after it closed at a record. The Dow Jones Industrial Average, meanwhile, slipped 0.1%, or about 31 points.

Stocks and bonds have steadied after the Federal Reserve whipsawed markets last week by signaling it might raise interest rates sooner than previously expected to ward off higher inflation. A scramble to adjust portfolios in response to that guidance has now subsided, investors say.

Fed Chairman

Jerome Powell

said Tuesday he had “a level of confidence” that inflation would abate, bolstering the view that it will be many months before the central bank shifts its monetary policy stance.

“We should expect markets to show a heightened sensitivity to economic data from here on, now that investors have embraced the idea the monetary cycle is turning,” said

Paul O’Connor,

head of the multiasset team at Janus Henderson Investors. “We should expect markets in the months ahead to be more volatile and more uncertain than they have been maybe over the past six months.”

Stocks have surged for much of the past year, helped by an improving economy and steady monetary policy. Some investors viewed the shake-up that followed the Fed’s changed tone last week as an opportunity to add to positions in value stocks and commodity markets such as copper. Sectors such as banking and energy, along with industrial metals, slid last week after benefiting from bets on higher growth and inflation for much of the year.

“There was an overreaction in bond yields and, as a second derivative of that, in bank stocks,” said Matthew Quaife, heat of multiasset investment management for Asia at Fidelity International. “Growth will be pretty strong over the medium term.”

The Federal Reserve is considering digitizing the dollar, giving people money they can access on their phone and bypassing electronic payments that can be slow and costly for businesses.

Energy shares led gains among the S&P 500 sectors on Wednesday as brent-crude futures, the benchmark in international oil markets, rose 1.5% to $75.20 a barrel.

In bond markets, the yield on the 10-year U.S. Treasury note rose to 1.489%, from 1.471% Tuesday. Yields rise as bond prices fall.

Bitcoin rose more than 3% from its 5 p.m. Tuesday level to $34,186.21. The cryptocurrency briefly dropped below $30,000 on Tuesday, erasing all of its gains for 2021.

Overseas, the Stoxx Europe 600 edged down 0.2%. Japan’s Nikkei 225 was relatively flat by the close of trading, while China’s Shanghai Composite edged up 0.3%. Hong Kong’s Hang Seng Index gained 1.8%.

Stock futures gained after Fed Chairman Jerome Powell’s testimony.



Photo:

Nicole Pereira/Associated Press

Write to Joe Wallace at [email protected]

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