A six-day advance for the S&P 500 sent the gauge above its 4,400 mark. Lennar Corp. led a rally in homebuilders on a bullish outlook. Microsoft Corp., which has unveiled a procession of artificial intelligence-based products in recent months, climbed toward a record. The Dow Jones Industrial Average was on pace for its highest close since December. A gauge of US-listed Chinese stocks jumped with Beijing seen rolling out more stimulus to help the economy.
Equities continued to gain traction after the US benchmark crossed the bull-market threshold last week, surging more than 20% from its October low. Traders kept piling into stocks even after the S&P 500’s 14-day relative strength index topped 70 — which is seen by some traders as one indication of an overbought market.
“US stocks have defied skeptics and rallied this year in the face of bank collapses, constant fears of a recession, and what’s expected to be a slowdown in corporate profits,” said Arthur Hogan, chief market strategist at B. Riley Wealth. “For our part, we assume that inflation will look better in the second half.”
Bonds reversed course, with the yield on 10-year Treasuries declining five basis points to 3.73%. The euro climbed as the European Central Bank lifted interest rates by another quarter-point, with President Christine Lagarde describing a further hike in July as “very likely.”
Federal Reserve officials paused their series of interest-rate hikes Wednesday, but projected borrowing costs will go higher than previously expected, owing to what Chair Jerome Powell called surprisingly persistent inflation and labor-market strength.
‘Awkward’
The Fed is now in a “data-dependent” mode before it delivers what may be just one final increase in US borrowing costs next month, former Vice President Richard Clarida said.
“It was what I would call an awkward but hawkish pause,” Clarida, who is now a global economic advisor at Pacific Investment Management Co. told Bloomberg Television on Thursday.
The US economy is holding up, but losing steam.
While an advance in retail sales last month exceeded nearly every estimate, the report also showed consumer demand has moderated from the past year. Separate data Thursday showed factory production remained sluggish and applications for unemployment benefits held at the highest level since late 2021.
In other corporate news, Kroger Co. dropped after its quarterly revenue fell just short of Wall Street’s estimates, signaling that the long sales boom spurred by the pandemic is cooling off. Delta Air Lines Inc.’s board voted to restart the company’s quarterly dividend.
Elsewhere, oil rebounded as strengthening demand in China outweighed concerns over further interest rate hikes in the US. West Texas Intermediate futures traded near $70 a barrel on Thursday after falling 1.7% in the previous session.
Key events this week:
- Bank of Japan rate decision, Friday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.8% as of 12:07 p.m. New York time
- The Nasdaq 100 rose 0.8%
- The Dow Jones Industrial Average rose 1%
- The Stoxx Europe 600 fell 0.1%
- The MSCI World index rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index fell 0.6%
- The euro rose 1% to $1.0935
- The British pound rose 0.8% to $1.2762
- The Japanese yen fell 0.2% to 140.41 per dollar
Cryptocurrencies
- Bitcoin was little changed at $24,940.25
- Ether was little changed at $1,639.32
Bonds
- The yield on 10-year Treasuries declined five basis points to 3.73%
- Germany’s 10-year yield advanced five basis points to 2.50%
- Britain’s 10-year yield was little changed at 4.38%
Commodities
- West Texas Intermediate crude rose 2.9% to $70.26 a barrel
- Gold futures were little changed