NEW YORK (Reuters) – Wall Street rose and crude oil prices rose on Thursday as strong economic data failed to change expectations that the Federal Reserve (US central bank) will leave its key interest rate unchanged next week.
The broad-based rally sent all three major stock indexes higher, with a continued upward trajectory for oil prices putting energy stocks (.SPNY) ahead.
A flurry of economic data released before the opening bell showed that energy prices, specifically gasoline, were largely responsible for a hotter-than-expected producer price reading and a retail sales figure that beat consensus.
“The Fed has directed the focus on core (inflation), and the price change we’ve seen is coming from energy,” said Michael Green, chief strategist at Simplify Asset Management in Philadelphia. “This indicates that the Fed is done raising interest rates and this removes concerns about stocks.”
“This is consistent with the idea of a soft landing,” Green added.
The European Central Bank raised its key interest rate to a record high, but also hinted that this latest increase would be the last.
“Once a central bank decides it’s going to pause, everyone joins in,” Green said. “There is a general feeling that the cycle of price hikes has ended for now.”
Financial markets have a 97% likelihood that the Fed will keep its target Fed Funds rate steady at 5.25%-5.50% at the conclusion of next week’s monetary policy meeting, and a 66.8% increased chance of holding at next November’s meeting. According to CME’s FedWatch tool.
The Dow Jones Industrial Average rose 206.18 points, or 0.6%, to 34,781.71 points, the Standard & Poor’s 500 Index gained 27.84 points, or 0.62%, to 4,495.28 points, and the Nasdaq Composite Index increased 97.61 points, or 0.62%. 0.71% to 13911.20.
European stocks jumped after the European Central Bank, which raised interest rates for the tenth time in a row, indicated that it had reached the end of its monetary policy tightening cycle.
The European STOXX 600 Index (.STOXX) rose 1.45%, and the MSCI Worldwide Stock Index (.MIWD00000PUS) rose 0.71%.
Emerging market stocks rose 0.71%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.71% higher, while Japan’s Nikkei (.N225) rose 1.41%.
The dollar rose against a basket of global currencies in the wake of US economic data, and due to the weakness of the euro after the European Central Bank’s interest rate decision.
The dollar index (.DXY) rose 0.37%, with the euro falling 0.56% to $1.0668.
The Japanese yen rose by 0.24% against the dollar at 147.12 to the dollar, while the British pound last traded at $1.2425, down 0.50% during the day.
US Treasury yields rose but remained within range after the producer price index and retail sales reports.
The price of the benchmark 10-year bond fell 4/32 to yield 4.2644%, from 4.248% late Wednesday.
The 30-year note fell 16/32 to yield 4.3675%, from 4.337% late Wednesday.
Oil prices rose, with Brent crude touching its highest levels this year, as expectations of tight supplies offset demand concerns.
US crude rose by 1.78% to $90.10 per barrel, and Brent crude recorded $93.54 in the latest trading, rising by 1.81% during the day.
Gold prices stabilized, regaining strength after the initial decline against the strength of the US dollar.
Gold in spot transactions added 0.1 percent to $1,907.69 per ounce.
Steven Kolb reports. Additional reporting by Mark Jones in London, Editing by William MacLean
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