U.S. stocks rose on Thursday, ignoring Microsoft’s latest corporate earnings forecast and Federal Reserve Vice President Lael Brainard’s comments suggesting the central bank could make aggressive rate hikes in September.
The S&P 500 gained 1.8 on Thursday after a difficult start to trading, while the Nasdaq Composite, with a lot of technology, rose 2.7%. Both indices closed the session on Wednesday 0.7% lower.
Microsoft cut its quarterly earnings forecasts early Thursday due to unfavorable exchange rates. The dollar has risen sharply since the beginning of the year, reducing the value of U.S. foreign exchange earnings when translated into U.S. currency. After falling early in the session, Microsoft shares recovered those losses and ended the day 0.8 percent higher.
The prospect of higher interest rates, which could affect companies’ future earnings, also did little to dampen US equities. Brainard said Thursday that arguing a pause in the rate hike in September was “very difficult,” which put water on the prospect of a more moderate Fed, which had been rejected by investors to curb its prospects. growth.
U.S. government bonds fell silent on Thursday following Brainard’s comments. The yield on the U.S. Treasury’s 10-year benchmark rose 0.01 percentage points to 2.91%. The policy-sensitive two-year yield remained stable at 2.64%.
The Treasury bond movement followed a sell-off a day earlier after stronger-than-expected results from a close-up survey of the US manufacturing sector, which indicates that the Fed may have more room to increase the costs of borrowing without causing a recession.
U.S. employment data released Friday will provide more clues as to how far the central bank can tighten policy to curb rising prices, with a warmer labor market that could indicate the need for further action. aggressive. Economists surveyed by Reuters expect employers in the world’s largest economy to add 325,000 new jobs in May, up from 428,000 in April.
Meanwhile, Brent crude rose 1.1% to $ 117.61 a barrel on Thursday despite OPEC and its allies agreeing to accelerate oil production in July and August. Despite the rise in oil, energy was the worst performing sector in the S&P on Thursday.
The Saudi decision to increase supplies would probably be more symbolic, showing that the kingdom is responding to pressure from the United States to get more crude, which upsets the balance, given the modest agreed increases, analysts said.
While the deal calls for cartel members to increase production by nearly 650,000 barrels a day, actual increases are likely to approach 350,000 b / d as some members struggle to meet their quotas, he said. the consulting firm Rapidan Energy Group.
Most of the OPEC additions agreed on Thursday had already been planned and put on the oil market.
Losses in the oil sector affected by Russia’s sanctions later this year could also reduce the size of OPEC + additions, and the International Energy Agency says the country could lose up to 3 million barrels per day supply, about 3% of world demand, as the embargo hardens.
Elsewhere, Europe’s Stoxx 600 regional index rose 0.6 percent, although data released earlier in the day showed that eurozone production prices rose at a record annual rate. 37.2 percent in April, up from 36.9 percent a month earlier in the last year. a sign of persistent inflationary pressures. An independent inflation report this week revealed that annual growth in consumer prices on the block exceeded expectations to reach 8.1 percent in May.
UK markets were closed for a public holiday.