S&P Futures Signal Endurance to Rate-Fueled Rally: Markets Wrap

　　(Bloomberg) -- Stock futures pointed to a longer advance for the S&P 500 and Nasdaq 100 as investors sought vindication from Federal Reserve Chair Jerome Powell for bets on monetary easing. Treasuries also rose.

　　Yields on two-year Treasuries traded near a three-month low, reflecting a popular bet that the US yield curve will normalize toward a steeper slope. The idea behind the trade is that rate cuts, when they materialize, push down yields on short-term securities while likely fanning growth and inflation which drive longer-dated yields up. Expectations for loose fiscal policy also bolster the view.

　　“Were in position for curve steepeners,” Nicola Mai, sovereign credit analyst at Pimco, said in an interview with Bloomberg TV. “This year or early next year we should be getting to that disinversion of the curve for a couple of reasons. First of all rates should start to fall. Also I think the long end of the curve is going to remain high on fiscal concerns.”

　　Contracts on the S&P 500 and Nasdaq 100 rose Wednesday after the underlying gauges notched new records. Swap traders continue to project two rate cuts in 2024.

　　The S&P 500 climbed for a sixth consecutive session on Tuesday, its longest winning streak since January. Speaking to lawmakers Tuesday, Powell was careful not to offer a timeline for interest-rate cuts, which investors are now betting will begin in September.

　　Further Congressional testimony by Powell on Wednesday, and key US inflation and jobs data tomorrow, may provide further clues on the policy path.

　　In the premarket, Aehr Test Systems shares surged 15% after its fourth-quarter revenue beat estimates. LegalZoom.com tumbled 30% after the legal services company cut full-year revenue guidance and replaced its chief executive officer.

　　In commodities, oil edged lower as concerns about Chinese demand and continued uncertainty over the timeline for Federal Reserve interest-rate cuts outweighed signs of another inventory draw in the US. Copper and iron ore declined, while gold was steady.

　　Key events this week:

• Jerome Powell testifies to the House Financial Services Committee, Wednesday
• Feds Austan Goolsbee, Michelle Bowman and Lisa Cook speak, Wednesday
• US CPI, initial jobless claims, Thursday
• Feds Raphael Bostic and Alberto Musalem speak, Thursday
• China trade, Friday
• University of Michigan consumer sentiment, US PPI, Friday
• Citigroup, JPMorgan and Wells Fargo earnings, Friday

　　Story continues

　　Some of the main moves in markets:

　　Stocks

• S&P 500 futures rose 0.2% as of 7:07 a.m. New York time
• Nasdaq 100 futures rose 0.3%
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 rose 0.6%
• The MSCI World Index rose 0.1%

　　Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0823
• The British pound rose 0.2% to $1.2811
• The Japanese yen fell 0.1% to 161.53 per dollar

　　Cryptocurrencies

• Bitcoin rose 1.2% to $58,639.95
• Ether rose 1% to $3,103.35

　　Bonds

• The yield on 10-year Treasuries declined three basis points to 4.27%
• Germanys 10-year yield declined six basis points to 2.52%
• Britains 10-year yield declined six basis points to 4.10%

　　Commodities

• West Texas Intermediate crude fell 0.2% to $81.28 a barrel
• Spot gold rose 0.4% to $2,373.54 an ounce