Stocks extended gains Wednesday, while Treasury yields steadied and the dollar slipped against its global peers, as investors look to inflation data and bank earnings later this week to consolidate Wall Street's early year gains.
Stocks ended higher Tuesday, lead by solid gains in the tech space, as Treasury yields retreated following a speech from Federal Reserve Chairman Jerome Powell in Stockholm that sidestepped the issue of near-term rate hikes and made only a tangential nod to domestic monetary policy.
Powell's decision not to lean against market expectations of slower Fed rate cuts, whether by chance or design, was taken as a bullish signal for stock markets that have become increasingly sensitive to headline central bank risk.
Bets on a 25 basis point rate hike from the Fed on February 1 were consolidated, with the CME Group's FedWatch indicating a 79.2% probability, while 2-year Treasury note yields nudged lower, to 4.218%, in late New York trading.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.03% higher at 103.26, but still within touching distance of the six-month low of 103.00 it reached earlier this week.
With JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) kicking-off the fourth-quarter earnings season on Friday, and December CPI data due Thursday at 8:30 am EST, markets are likely to focus on today's $32 billion 10-year bond auction, as well as broader volatility measures, in what could be a muted session before this week's major headline releases.
Traders will track what is known as the bid-to-cover ratio in today's sale, which will conclude at 1:00 pm EST, in order to gauge overall demand.
Investors bid $2.53 for every $1 of 10-year notes on offer from the Treasury, auction data indicated, a notably firmer tally than the 2.31 'bid-to-cover' ratio recorded at the last auction on December 12, when the yield was just 3.625%, and the highest since August.
Prices and yields in the bond market move in opposite directions, making today's paper more expensive than it was in early December. Foreign buyers, the data indicated, took down around two thirds of the sale, up from the 31.7% figure reported in December.
Benchmark 10-year notes were last trading at 3.537% in the wake of the solid auction, down nearly 26 basis points from its closing levels at the end of December.
On Wall Street, the S&P 500 was marked 35 points higher in early afternoon trading while
The Dow Jones Industrial Average finished up 268 points, or 0.80%, 33,973, while the S&P 500 gained 1.28%. The tech-focused Nasdaq posted its first four-day rally since November, rising 1.67%.
Tesla (TSLA) shares gained 3.68%, after the carmaker filed for permission to expand its Texas gigafactory.
Apple (AAPL) shares also ended higher, rising 2.1%, following reports that suggested the tech giant will begin building its own iPhone and Apple Watch display screens as it accelerates plans to lessen reliance on third-party providers.
U.S. airline stocks were also active, briefly falling across the board, after the Federal Aviation Administration grounded flights nationwide following the failure of a key computer system. Most airline stocks ended the day in the green.
In overseas markets, the the region-wide MSCI ex-Japan index rose 0.34% into the close of trading, boosted by China re-opening hopes that have lifted global commodity prices, while Europe's Stoxx 600 was marked 0.63% higher in early Frankfurt dealing. London's FTSE 100 was up 0.7%.
