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GLOBAL MARKETS-Stocks rise as traders assess rate outlook, dollar weakens vs yen

Credit: REUTERS/ANDREW KELLY

By Caroline Valetkevitch

NEW YORK, Feb 14 (Reuters) - Global stock indexes edged higher while Treasury yields slipped on Wednesday as investors tried to assess the timing of possible interest rate cuts from the Federal Reserve, while the dollar eased off of a three-month peak against the yen.

Japan's top currency officials warned against what they described as rapid and speculative yen moves overnight.

Nvidia NVDA.O shares rose 2.5% and the dominant AI chip maker overtook Alphabet's GOOGL.O market capitalization. Nvidia, which reports quarterly results next week, now has a stock market value of $1.825 trillion.

Yields briefly extended declines after Chicago Fed President Austan Goolsbee said the Fed's path to its 2% inflation target rate would remain on track even if price increases run a bit hotter than expected over the next few months, and the central bank should be wary of waiting too long before cutting interest rates.

Market expectations for a cut by the Fed in June of at least 25 basis points stand at 78.5%, according to CME's FedWatch Tool, while expectations for a cut in May have fallen to 38.5%, down from 63.7% a week ago.

An upside surprise in U.S. inflation on Tuesday showed the consumer price index (CPI) rose 3.1% on an annual basis, above forecasts for a 2.9% increase.

With the CPI report, "it wasn't as if inflation held, it was that it accelerated, and that was what got the market. Suddenly the expectations (on possible rate cuts) pulled back even more," said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

"Every data release is now viewed through the eyes of the Fed. The market wants to know when is the Fed going to feel comfortable about cutting rates and initiating a rate cut regime," Krosby said.

Thursday brings U.S. retail sales data, while on Friday the U.S. producer price index report will be released.

The Dow Jones Industrial Average .DJI rose 151.52 points, or 0.40%, to 38,424.27, the S&P 500 .SPX gained 47.45 points, or 0.96%, to 5,000.62 and the Nasdaq Composite .IXIC gained 203.55 points, or 1.30%, to 15,859.15.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 5.37 points, or 0.73%, to 744.95, while Europe's STOXX 600 .STOXX index rose 0.5%. Japan's Nikkei.N225, which hit its highest in 34 years on Tuesday, fell 0.7%.

The yield on the 10-year Treasury note US10YT=RR fell 5 basis points to 4.267% after touching 4.332% earlier in the session, its highest since Dec. 1.

The dollar index =USD fell 0.13% at 104.72 as investors consolidated gains, while the euro EUR= up 0.15% at 1.0725. Against the Japanese yen JPY=, the dollar weakened 0.12% at 150.61. The dollar was at a three-month peak against the yen on Tuesday.

The 150 level on the pair has been seen in the past as a potential catalyst for intervention by Japanese monetary authorities. It was just past this level that they intervened to shore up the yen in late 2022.

In cryptocurrencies, bitcoin BTC= gained 4.16% at $51,626.95.

Oil futures declined as higher U.S. crude inventories weighed on prices. U.S. crude CLc1 lost $1.23 to settle at $76.64 a barrel and Brent LCOc1 fell $1.17 to settle at $81.60.

Spot gold XAU= was steady at $1,991.92 per ounce.

World FX rates YTD http://tmsnrt.rs/2egbfVh

Asian stock markets https://tmsnrt.rs/2zpUAr4

Bitcoin is starting to shake off its last speculative bubble https://reut.rs/3SzWEUR

As goods inflation eases, services step in As goods inflation eases, services step in https://tmsnrt.rs/3NBTf3Z

(Reporting by Caroline Valetkevitch; Additional reporting by Amanda Cooper in London, Rae Wee in Singapore; Editing by Jan Harvey, Nick Zieminski, Jonathan Oatis and David Gregorio)

((caroline.valetkevitch@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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