The U.S Stock Market Extends Its Rally As Traders Eye A Peak In Interest Rates

A key inflation indicator dropped last month, suggesting the Federal Reserve may be close to finishing its rate-hiking campaign, as technology companies extended the week's US stock rise. Treasuries went up.

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The personal consumption expenditures price index, the Fed's preferred measure of inflation that excludes food and energy, increased by 0.3% in February, which was somewhat less than the average expectation. The PCE price index, however, was up 5% from a year earlier, slowing from January but still exceeding the Fed's 2% target.

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The tech-heavy Nasdaq 100 climbed 1.7%, allowing it to record its greatest quarterly increase since June 2020, while the S&P 500 gained 1.4%, taking its weekly gains to 3.5%, the highest since November.

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According to Ian Lyngen of BMO Capital Markets, "Overall, it was a round of data consistent with the peak inflation scenario but also with the Fed's assertion that there remains work to be done to re-establish price stability."

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On Friday, as investors battled to respond to recent bank failures and the shifting outlook for interest rates, Treasuries also stopped the quarter of dramatic swings higher. Friday saw a decline in both the 10-year maturity and the two-year yield, which both dropped to about 4.05%. In comparison to important counterparts, the dollar got stronger.

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The director of equities portfolio and technical strategy at Raymond James, Michael Gibbs, said that the S&P 500 had done well to rebound from concerns over the banking sector during the previous two weeks. The rally has, however, been a little more uneven underneath the surface, reflecting the uncertainty present in the current environment.

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The number of companies above their 50-day moving average has decreased, according to Gibbs, even as technology stocks have reached their greatest level since August 2022, driving up gains in the overall market. The American rise is driven by a relatively small number of equities.

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According to Matt Maley, chief market strategist at Miller Tabak & Co., "Extremely narrow rallies are not healthy ones at all, so it will be crucial for the bulls to see more groups join in the rise moving forward." If they don't, this lovely gain will soon turn into a nasty drop due to a correction in the big-cap tech companies.

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Investors' concerns are expected to move from concerns about high-interest rates to concerns about the possibility of a recession, according to strategists at Citigroup Inc. As a result, American stocks will become more appealing than those in Europe.

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The US stock market was upgraded by a Citi team led by Beata Manthey on Friday from underweight to overweight because it "performs more defensively than other markets" during earnings recessions. They predict a 5% decline in worldwide earnings-per-share in 2023 and claim that experts will probably lower profit projections even more.

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With persistent disruptions to Iraqi shipments, oil traded in New York witnessed a weekly rise of 9%. With a gain of almost 70%, the last quarter for bitcoin was the greatest since March 2021. Yet when Donald Trump became the first past president to be charged, Digital World Acquisition Inc., the corporation that is using a blank check to float his media business, rose.

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