Stock Market Today – 9/9: Stocks Extend Gains, Dollar Pulls Back

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U.S. stock futures traded firmly higher on Friday as the dollar retreated and Treasury bond yields held steady as investors took comfort in both the certainty of Fed rate hikes and by the prospects of a soft landing for the world’s largest economy.

Federal Reserve Chairman Jerome Powell’s forty-minute chat with Cato Institute Chairman Peter Goettler yesterday, his final public remarks ahead of the Sept. 21 policy meeting, essentially cemented the case for a third consecutive rate hike of 75 basis points.

The consistency of the Fed’s messaging, however, appears to be having its effect, with traders now less focused on the size of September’s rise in favor of when and how Powell and his colleague will reach the so-called “terminal” rate. Fed Funds.

Three Fed officials – Charles Evans, Christopher Waller and Esther George – will speak this morning and are likely to reiterate the collective trajectory and destination of the terminal rate.

If this rate, which should be north of 4%, proves restrictive enough to keep inflation in check, but not so tight as to stifle growth prospects, the Fed will have engineered the so-called “soft landing”. necessary to enable new corporate profits. growth.

Help in this regard came from an overnight jump in the euro, which rose to 1.005 against the greenback and dragged down the US dollar index by 0.83%, to 108.456, against a basket of its global peers.

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The moves were attributed to yesterday’s giant ECB rate hike, the largest on record, and the clearly hawkish signal from ECB President Christine Lagarde.

The weaker dollar again added upward pressure on oil prices, offsetting reports that the White House is considering another release of crude from the Strategic Petroleum Reserve early next year.

WTI crude futures for October delivery rose $1.49 in the session to $84.99 a barrel while Brent contacts for November, the global benchmark, added $1.55 to settle. trading at $90.73 a barrel.

On Wall Street, futures tied to the S&P 500 point to an opening bell gain of 28 points while those tied to the Dow Jones Industrial Average are priced for a 205-point lead. Tech-focused Nasdaq futures are pointing to a 120-point upside move.

In overseas markets, Europe’s benchmark Stoxx 600 index gained 1.5% at midday in Frankfurt, while the regional MSCI ex-Japan index gained 1.6% to help global equities reach their highest level in more than a week.

In Britain, the FTSE 100 rose 1.5% during the session, although trading volumes were muted as the country enters a twelve-day mourning period to celebrate life and mark the death of Queen Elizabeth II, the country’s longest reigning queen. monarch.

King Charles III, 73, will meet Prime Minister Liz Truss on Friday and address the nation later today, while a meeting of the Membership Council, which handles monarch changes, is due to be held on Saturday at St. James’s Palace.

Flags for royal residents, as well as across the country, will fly at half mast, while a cannon salute, consisting of 96 rounds, will be fired by the 104 Regiment Royal Artillery at Cardiff Castle at 1 p.m. London time.

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