Wall Street hesitates; The US 10-year rate stabilizes at nearly 2%

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NEW YORK, Feb 11 (Reuters) – Wall Street swayed in morning trade on Friday, retreating from initial gains, and benchmark Treasury yields hovered around 2% as market participants grappled with decades-high inflation and the prospect of a tighter rate hike schedule from the US Federal Reserve.

Major indexes were last seen slightly higher, with oil prices helping energy stocks (.SPNY) post the largest percentage gains.

The S&P 500, Nasdaq and Dow were all on track to post weekly gains.

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A report from the Labor Department on Thursday showed US inflation at its highest level in four decades, fueling fears that the Fed could start raising key interest rates more aggressively than many had expected. foreseen. Read more

Those concerns were heightened after St. Louis Federal Reserve Chairman James Bullard told Bloomberg he wants a full percentage point hike in interest rates in the next three policy meetings of the Federal Reserve. central bank. Read more

Financial markets are fully pricing in a rate hike of at least 25 basis points by the Fed at its March 15-16 policy meeting and are pricing in a 71.5% chance of a 50 basis point hike, according to CME Group’s FedWatch tool.

“We really won’t know what the Fed is going to do until that happens,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “There’s a lot more data by the next Fed meeting that they can access.”

“It’s unlikely the Fed won’t act, but I still believe we’ll see signs of inflation moderating by the time the Fed meets and a 25 basis point hike is the decision. most likely,” Ghriskey added.

The Dow Jones Industrial Average (.DJI) rose 105.6 points, or 0.3%, to 35,347.19, the S&P 500 (.SPX) gained 3.02 points, or 0.07%, to 4,507.1 and the Nasdaq Composite (.IXIC) fell 16.92 points, or 0.12%, to 14,168.72.

Interest-rate-sensitive tech stocks weighed on European equities, with high US inflation raising the odds of a more aggressive Fed.

The pan-European STOXX 600 index (.STOXX) lost 0.44% and the MSCI gauge of stocks across the world (.MIWD00000PUS) lost 0.21%.

Emerging market stocks lost 0.64%. MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) closed down 0.73%, while the Japanese Nikkei (.N225) rose 0.42%.

U.S. Treasury yields eased on Friday as markets priced a sharp rise the day before, led by inflation and Bullard’s commentary.

Benchmark 10-year notes were last up 2/32 to 2.0224%, down from 2.029% on Thursday night.

The 30-year bond last fell 12/32 to 2.3197%, down from 2.302% on Thursday night.

The dollar was little changed against a basket of global currencies, but was on course for weekly gains on CPI data and concerns over aggressive Fed tightening.

But the euro weakened following a warning from European Central Bank President Christine Lagarde that raising interest rates would only hurt the economy. Read more

The dollar index (.DXY) rose 0.16%, with the euro falling 0.27% to $1.1396.

The Japanese yen strengthened 0.14% against the greenback to 115.88 to the dollar, while the pound last traded at $1.3594, up 0.29% on the day.

Crude prices rose after the International Energy Agency (IEA) said oil markets were tight, exacerbating supply problems as Russia massed more troops along the Ukrainian border and diplomats were rushing to avoid an invasion. Read more

Gains were capped on the resumption of indirect talks on reviving a nuclear deal between the United States and Iran, raising hopes that the lifting of sanctions on Iranian oil could ease supply worries.

U.S. crude rose 1.86% to $91.55 a barrel and Brent was last at $92.74, up 1.45% on the day.

Gold prices rose slightly, approaching the previous session’s two-week high.

Spot gold added 0.5% to $1,835.50 an ounce.

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Reporting by Stephen Culp; Additional reporting by Elizabeth Howcroft in London; Editing by Andrea Ricci

Our standards: The Thomson Reuters Trust Principles.

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