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Nasdaq 100 Gains for Fifth Day; Treasuries Decline: Markets Wrap

(Bloomberg) -- US stock indexes ended Wednesday off session highs, after earnings-related optimism fueled by Netflix Inc. moderated and traders tempered their expectations for Tesla Inc.’s quarterly figures. The electric-vehicle maker reported disappointing results after the market closed, sending its shares lower in after-hours trading.

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The S&P 500 finished the day little changed while the tech-heavy Nasdaq 100 jumped 0.5%. US Treasury yields rose, with the 30-year rate climbing to its highest level so far this year. The Bloomberg Dollar Spot Index trimmed earlier declines.

Among corporate results reported after the closing bell, Tesla expects slower growth this year and International Business Machines Corp. anticipates strong free cash flow in 2024. Investors are now bracing for a slew of US economic data — including gross domestic product — set to release on Thursday. They’re continuing to mull when the Federal Reserve will cut interest rates.

“Frankly, everything depends on the incoming data now and there are a lot of potentially significant releases over the next few weeks that could swing the odds of a March rate cut in either direction,” Paul Ashworth, chief North America economist at Capital Economics, wrote. “We still think the Fed will lower rates by 25 basis points at that upcoming meeting.”

US data that released earlier on Wednesday showing business activity expanded in January by the most in seven months bodes well for stocks, according to Renaissance Macro’s Neil Dutta.

“Growth is up and inflation is down. The former puts a ceiling on how many cuts the Federal Reserve will do while the latter means the Fed still ends up cutting,” he said. “Very good scenario for equity markets.”

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Earlier, Bank of Canada held its key interest rate at 5%, as expected, and signaled it’s done hiking. Also on the roster this week is European Central Bank’s policy meeting on Thursday. Euro-area bond yields slipped earlier after data showed business activity contracted in January for the eighth month.

Elsewhere, industrial metals prices received a boost after China signaled plans to stimulate its economy by cutting the reserve requirement ratio for banks. The move should allow Chinese banks to step up lending and their purchases of government bonds. The news also supported Brent crude around $80 a barrel.

Key events this week:

  • Eurozone ECB rate decision, Thursday

  • Germany IFO business climate, Thursday

  • US GDP, initial jobless claims, durable goods, wholesale inventories, new home sales, Thursday

  • Japan Tokyo CPI, Friday

  • US personal income & spending, Friday

  • Bank of Japan issues minutes of policy meeting, Friday

Some of the main moves in markets:

Stocks

  • The S&P 500 was little changed as of 4 p.m. New York time

  • The Nasdaq 100 rose 0.5%

  • The Dow Jones Industrial Average fell 0.3%

  • The MSCI World index rose 0.1%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2%

  • The euro rose 0.2% to $1.0880

  • The British pound rose 0.2% to $1.2717

  • The Japanese yen rose 0.5% to 147.62 per dollar

Cryptocurrencies

  • Bitcoin rose 0.7% to $39,485.13

  • Ether fell 0.1% to $2,199.39

Bonds

  • The yield on 10-year Treasuries advanced five basis points to 4.17%

  • Germany’s 10-year yield declined one basis point to 2.34%

  • Britain’s 10-year yield advanced two basis points to 4.01%

Commodities

  • West Texas Intermediate crude rose 1.3% to $75.35 a barrel

  • Spot gold fell 0.8% to $2,012.42 an ounce

This story was produced with the assistance of Bloomberg Automation.

--With assistance from John Viljoen, Cristin Flanagan, Julien Ponthus, Sujata Rao, Felice Maranz and Isabelle Lee.

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