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Treasury yields slip after rally
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Focus on ISM services sector data
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Dell slips as forecast disappoints
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Indexes up: Dow 0.24%, S&P 0.47%, Nasdaq 0.63%
(Updates to market open)
By Sruthi Shankar and Shristi Achar A
March 3 (Reuters) - U.S. stocks rose on Friday as
Treasury yields took a breather from a week-long rally that was
sparked by worries that the Federal Reserve would keep interest
rates higher for longer to tame stubborn inflation.
Wall Street indexes have had a volatile start to March after
the latest economic data pointed to rising raw material costs
and a resilient labor market, while signaling that the U.S.
central bank was yet to see the desired impact of its policy
tightening measures on inflation.
The U.S. 10-year Treasury yield fell on Friday
after touching a four-month high in the previous session but
stayed above the 4% level. "What is driving the optimism despite the new data we
received in contrast to January is investors are still open for
the next Fed meeting to come up with a 25 basis point hike,"
said Guido Petrelli, chief executive officer of Merlin Investor.
"The volatile market will continue in March until we get
consistent data in terms of the economy slowing down but not
open up worries of a recession."
Offering respite to stock markets on Thursday, Atlanta Fed
President Raphael Bostic said the impact of higher rates on the
economy might only begin to "bite" in earnest this spring, an
argument for the Fed to stick with "steady" quarter-point rate
increases.
Hawkish comments from Fed policymakers and recent economic
data have pushed traders to price in at least three more 25
basis point rate hikes this year and see interest rates peaking
at 5.43% by September from the current 4.66%. The odds of a bigger 50 basis point rate hike in March stood
at just 20% but investors are awaiting monthly payrolls and
consumer prices data to see if the Fed will go big later this
month.
The Institute for Supply Management's survey, due at 10:00
a.m. ET, is expected to show that a gauge of services sector
activity in February eased to 54.5 in February from 55.2 in
January.
Central bank officials including Bostic and Fed Dallas
President Lorie Logan are scheduled to speak later in the day.
At 9:42 a.m. ET, the Dow Jones Industrial Average was up 79.56 points, or 0.24%, at 33,083.13, the S&P 500 was up 18.74 points, or 0.47%, at 4,000.09, and the Nasdaq Composite was up 72.54 points, or 0.63%, at 11,535.52. Nine of the 11 major S&P sectors were higher, with communication services and technology indexes leading gains. Apple Inc rose 1.9% after Morgan Stanley said the stock could rally more than 20% this year on potential hardware subscription. Dell Technologies Inc slipped 0.9% after it forecast current-quarter revenue and profit below Wall Street estimates, hit by an ongoing demand slump in its PC business. Marvell Technology Inc slid 9% after the semiconductor maker reported lower-than-expected first-quarter profit and forecasts revenue below analysts' estimates. Hewlett Packard Enterprise rose 2.1% after the laptop maker gave an upbeat full-year earnings forecast. Broadcom Inc rose 4.3% after the chipmaker forecast second-quarter revenue above analysts' estimates as increased investments in AI spurred demand for chips. Advancing issues outnumbered decliners by a 2.98-to-1 ratio on the NYSE and 1.67-to-1 ratio on the Nasdaq. The S&P index recorded 14 new 52-week highs and two new lows, while the Nasdaq recorded 36 new highs and 18 new lows. (Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)
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