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Stocks End Winning Week With Rate Outlook in Focus: Markets Wrap

(Bloomberg) -- US stocks ended Friday little changed as investors assessed prospects for less-aggressive central bank tightening and weighed China’s latest move to stimulate its economy.

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The S&P 500 wavered for most of Friday’s shortened trading session. But its weekly gain of 1.5% took the index to the highest level since early September. The Nasdaq 100 also eked out a gain for the week, despite dropping on Friday. Most Treasuries erased early losses.

“It’s a slow day with US market holiday,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets. “We’re seeing a bit of profit taking and position adjustment post a strong risk rally last week.”

Sentiment was boosted this week after the Federal Reserve’s Nov. 1-2 meeting minutes showed most officials backing slowing the pace of interest-rate hikes. Since the Fed’s latest meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.

All eyes will be on the jobs report next week and on Fed Chair Jerome Powell and New York Fed President John Williams, who are among central bank officials scheduled to speak. Both officials will make clear that a tight labor market and elevated services inflation will keep the Fed hiking for longer, strategists with TD Securities wrote in a note.

“As markets welcome the prospect of smaller hikes, we expect them to counter that by emphasizing the need to reach an appropriately higher terminal rate,” they said.

Trading on Monday will also hinge on Black Friday sales and further information on the virus outbreak in China, said Julian Emanuel, Evercore ISI’s chief equity and quantitative strategist.

China’s central bank on Friday cut the amount of cash lenders must hold in reserve for the second time this year, an escalation of support for an economy racked by surging Covid cases and a continued property downturn. US-listed Chinese stocks fell and posted their first weekly decline this month.

“How effective that will prove to be when cities are seeing restrictions and effective lockdowns reimposed is hard to say,” said Craig Erlam, senior market analyst at Oanda. “But combined with other measures to boost the property market and ease Covid curbs, the cut could be supportive over the medium term when growth remains highly uncertain.”

European Union diplomats, meanwhile, won’t meet on Friday or over the weekend to discuss the oil-price cap as divisions within the bloc remain entrenched, according to people familiar with the matter. Oil suffered a third weekly loss.

Some of the main moves in markets:

Stocks

  • Futures on the S&P 500 were little changed as of 1 p.m. New York time

  • Futures on the Dow Jones Industrial Average rose 0.4%

  • The MSCI World index rose 0.4%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1%

  • The euro was little changed at $1.0404

  • The British pound fell 0.2% to $1.2093

  • The Japanese yen fell 0.4% to 139.13 per dollar

Cryptocurrencies

  • Bitcoin fell 0.3% to $16,501.34

  • Ether fell 0.4% to $1,190.77

Bonds

  • The yield on 10-year Treasuries was little changed at 3.70%

  • Germany’s 10-year yield advanced 12 basis points to 1.97%

  • Britain’s 10-year yield advanced eight basis points to 3.12%

Commodities

  • West Texas Intermediate crude fell 1.4% to $76.83 a barrel

  • Gold futures rose 0.4% to $1,767.70 an ounce

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Brett Miller, Natalia Kniazhevich, Isabelle Lee and Vildana Hajric.

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