US stocks rose on Thursday, beating the latest dismal corporate earnings forecast from Microsoft as well as comments from Federal Reserve Vice Chairman Lael Brainard suggesting the central bank may pursue strong interest rate hikes in September.
The S&P 500 index rose 1.8 on Thursday after a rough start to trading, while the tech-heavy Nasdaq Composite added 2.7 percent. Both indexes closed Wednesday’s session 0.7% lower.
Microsoft early Thursday cut its quarterly revenue forecast on the back side of adverse exchange rates. The dollar has strengthened since the start of the year, which reduces the value of revenue that US companies earn abroad when converted to US currency. After falling early in the session, Microsoft shares recovered those losses, ending the day 0.8% higher.
The prospect of higher interest rates, which can affect future earnings for companies, didn’t do much for US stocks either. Brainard on Thursday said it was “very difficult” to make a request for a pause in rate hikes in September, pouring water on the prospect of a more dovish Fed, which has been dampened by investors’ growth prospects. their.
US government bonds were muted on Thursday following Brainard’s remarks. Yields on the benchmark 10-year US Treasury note rose 0.01 percentage points to 2.91% higher. The policy-sensitive two-year yield was unchanged at 2.64%.
The move in Treasuries followed a sale a day earlier after better-than-expected results from a closely watched survey of the US manufacturing sector, suggesting the Fed may have more room to raise borrowing costs without causing out recession.
US jobs data released on Friday will provide more clues as to how far the central bank can tighten policy to limit price increases, with the hotter labor market likely to show more proactive action is needed. Economists polled by Reuters are expecting employers in the world’s largest economy to add 325,000 new jobs in May, compared with 428,000 in April.
Meanwhile, Brent crude was 1.1% higher on Thursday at $117.61 a barrel despite Opec and its allies. agreed to speed up oil production in July and August. Despite rising oil prices, energy was the worst performing sector in the S&P on Thursday.
Saudi Arabia’s decision to increase supply is likely to be more symbolic – suggesting the kingdom is responding to US pressure for more crude – than disrupting the balances, analysts say for, with modest increases agreed, analysts said.
While the agreement calls for cartel members increase production Consulting firm Rapidan Energy Group said an increase of nearly 650,000 bpd was likely to close to 350,000 bpd, as some members struggled to meet their quotas.
The majority of the Opec additions agreed on Thursday were planned and already priced into the oil market.
Losses from Russia’s sanctioned oil sector later this year could also reduce the size of the Opec+ additions, with the International Energy Agency saying the country could lose supplies up to 3 million bpd – about 3% of global demand – due to tightening sanctions.
Elsewhere, Europe’s regional Stoxx 600 index rose 0.6%, even as data released earlier in the day showed eurozone producer prices rose at a record annual rate. was 37.2% in April, up from 36.9% a month earlier, the latest sign of persistent inflationary pressures. A separate inflation report this week revealed that annual consumer price growth in the bloc topped expectations of 8.1% in May.
Markets in the UK were closed for a holiday.