Sept. 8 financial breakfast: yen weakest in 24 years amid strong dollar stimulus, BOJ fears difficult intervention, oil prices slump 6% on rising demand concerns
The dollar index traded near 109.56; the dollar hit another two-decade high of 110.79 in Wednesday's session, with Fed officials saying they still don't think the worst of U.S. inflation is over, providing conditions for the Fed to continue aggressive rate hikes; the dollar touched a 24-year high against the yen and a 37-year high against the pound, with Japan sticking to its dovish monetary policy and Europe facing economic problems, in contrast to The relatively stronger U.S. economy and hawkish Fed contrasted as the dollar closed somewhat lower, providing some respite for gold, which rallied nearly 1%; oil prices plunged 6% as concerns about slowing demand and economic outlook in Europe intensified.
Commodities close: Brent crude settled down $4.83 to $88 a barrel, falling below $90 a barrel for the first time since Feb. 8. U.S. crude settled down 5.7% at $81.94, the lowest since January. U.S. gold futures closed 0.9 percent higher, settling at $1,727.80.
U.S. stocks closed: The Dow Jones Industrial Average rose 1.4 percent to 31,581.28; the S&P 500 rose 1.83 percent to 3,979.87; and the Nasdaq gained 2.14 percent to 11,791.90.
Global Sentiment at a Glance
Major U.S. stock indexes climbed to their highest in about a month on Wednesday as U.S. bond yields fell and investors ignored hawkish statements made by Federal Reserve officials. The Nasdaq, S&P 500 and Dow Jones industrials last recorded large one-day percentage gains on Aug. 10. However, investors are skeptical that this is a long-term trend. The tech-heavy Nasdaq led the major indexes higher, ending a seven-day losing streak.
Hawkish statements from Fed Chairman Jerome Powell, coupled with signs of a slowdown in Europe and the economy and aggressive measures by major central banks to curb inflation, have led to a sharp sell-off in U.S. stocks since mid-August. Data indicating the strength of the U.S. economy has prompted traders to bet that the Federal Reserve will raise interest rates by 75 basis points later this month. Federal funds rate futures movements show that investors believe there is a more than 76% chance of such action.
The 10-year U.S. bond yield retreated from a three-month high touched early in the session, boosting rate-sensitive stocks such as Tesla, Microsoft and Amazon. High-growth companies, including those in the technology sector, tend to benefit when Treasury yields fall because it means a lower discount to their future profits when investors calculate valuations.
Still, investors are looking for more outward signs of how the Fed will raise rates to curb surging inflation ahead of its next meeting later this month. said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company: "Today The bond market is doing a little bit better, which makes the stock market feel a little bit better, but the big concern remains what the Fed is going to do on Sept. 21. So what we're seeing is a daily pull back and forth."
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