US stocks finished higher on Tuesday after Fed Chair Powell offered no clues for the future rate hike path at a forum in Stockholm. The tech-heavy index Nasdaq rose for the third consecutive trading day, mostly like on dip-buys as investors believe that inflation will cool further in December, encouraging the Fed to hit its peak on a rate hike cycle much earlier than the central bank’s current projection. However, the US bond yields resumed gains on Powell’s speech, indicating that fighting inflation has to be at a cost of economic growth. The upcoming US CPI data tends to be a key to steering the further markets’ movements, where a further slowdown in inflation may continue to support the current market rally.
Click to enlarge the table
- Nasdaq rose for the third consecutive trading day, up 1%, again outperforming both Dow and S&P 500. 9 out of 11 sectors in the S&P 500 finished higher, with Technology and Consumer Discretionary leading gains. Most big tech shares were higher, with Netflix up 3.9% and Meta Platforms rising 2.7%.
- Coinbase shares surged 13% after the crypto exchange announced to further cut 20% of its workforce, about 950 jobs. The headcount reduction follows an 18% layoff in June 2022 aiming to cut costs and keep growing in the current market downturn, which may save expenses by 25% in the March quarter.
- Microsoft plans to invest $10 billion in OpenAI, a startup that runs the popular AI tool ChatGPT. The investment together with other parties would value OpenAI at $29 billion, where Microsoft may get a 75% share of the company’s profits.
- The US dollar bounced off a session low as the US bond yield rose on Powell’s comments. The US dollar strengthened against most of the other major currencies, but the Eurodollar and the New Zealand dollar were flat against the greenback.
- Crude oil futures registered a second straight-day gain amid China’s reopening optimism. The upside momentum, however, faded somewhat as the recent Covid surge in China softened a near-term demand outlook. On the other hand, recession fears may continue to pressure oil prices as inflation is set to cool further due to central banks’ aggressive rate hikes.
- Metal prices, including gold and copper futures, continued to rise, reaching a fresh 7-month high. Cooling inflation, China’s reopening, and the softened US dollar are the three bullish factors that support the price surge in commodity prices.
- Futures point to a higher open across the Asian equity markets. ASX futures were up 0.45%, Nikkei 225 futures rose 0.34% and Hang Seng Index futures advanced 0.70%.
- Cryptocurrencies were mostly up following the global risk assets as traders seem to continue to pile into cheap coins to seek bargains. Both Bitcoin and Ethereum rose more than 1% in the last 24 hours, staying above 17,400 and 1,300, respectively.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.