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Wall Street gains, Nasdaq up ~0.5%
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Real estate leads S&P 500 sectors, comms srvs slips
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STOXX 600 up ~1.0%
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Weekly U.S. jobless claims rise modestly
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Bitcoin, crude, gold up; dollar weakens
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10-year Treasury up at 3.57%
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WALL STREET RALLIES IN SEA OF GREEN (1015 EDT/1415 GMT)
Wall Street is all systems go on Thursday after jobless claims show layoffs remain low and the labor market is extremely tight, suggesting the U.S. economy can withstand high interest rates.
Real estate led 10 of all 11 the S&P 500 sectors higher, as the beaten-down sector bounces almost 6% off five-month lows hit last Friday. Communications services was the sole declining sector. Semiconductors , struggling through its worst downturn in the last 13 years, also rose as did small caps and Dow transports . Value outpaced gains in growth stocks in a market awash in green.
But the market may be discounting the harm from tighter
credit markets as the Fed keeps monetary policy tight.
While difficult to assess how long the banking crisis will
linger, elevated funding costs and tighter lending standards
ahead present the potential for a serious shock, says
Torsten Slok, chief economist at Apollo Global Management.
"The bottom line is that if the ongoing banking crisis
results in tighter bank lending standards over the coming
quarters, it increases the risks of a harder landing," Slok said
in a note.
Here is a snapshot of market prices in early trading:
(Herbert Lash)
*****
WAITING FOR A CHINA REBOUND? HOW ABOUT GOLD? (GMT 1325) Though investors have put their hopes in the recovery of industrial activities in China, global concerns might make them look for a haven in precious metals instead.
According to Berenberg analysts, early signs of the long-awaited China rebound indicate it "will not be particularly stellar, offering only modest growth." Thus, rather than waiting for Godot from the East, investors could turn their attention to "well supported" gold, for instance. As the banking sector has been shaken by collapses and overall uncertainty, and global GDP is likely to slow in Q2, offsetting any potential gains from China, and gold might get a boost from a possibly more dovish Fed, Berenberg says. "In the near term, we believe that an overweight precious metals strategy is merited due to ongoing geopolitical concerns and risks in the banking sector." This being the case, the broker recommends gold-oriented stocks in its analysis, such as Greatland Gold , Endeavour Mining and Pan African Resources .
While Berenberg also highlights Boliden , which is
mostly copper-focused, as a "top-quality operator," it notes
that the Swedish miner should generate 14% of its 2023 revenue
from gold.
(Boleslaw Lasocki)
****
WATCH THE TAPE, THE TWO-YEAR, AND NOT THE FED (0915 EDT/1115 GMT) Yields on two-year Treasury note rose after jobless claims remained low on Thursday as tighter credit conditions have yet to show a material impact on the strong labor market. The jump in yields suggests the market sees the Federal Reserve still hiking rates to slow growth when policymakers meet in May.
But investors should follow the markets, not the Fed for clues on when the central bank's rate hikes will end, says Richard Saperstein, chief investment officer at Treasury Partners in New York.
It may be possible that the Fed raises rates by another 25 basis points when policymakers end their meeting on May 3, as many in the market believe, Saperstein says. But the two-year note's yield has moved below the fed funds rate, which historically signals that the Fed is near the end of its rate hiking cycle and the fed funds rate is near its peak. Meanwhile, futures pointed to a higher open after initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 198,000 for the week ended March 25, the Labor Department said on Thursday. Economists polled by Reuters had forecast 196,000 claims for the latest week. (Herbert Lash) ***** FOR THURSDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE
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