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U.S. stocks turned higher Friday, while the dollar added to gains on foreign exchange markets and Treasury yields slipped lower, as investors appeared to brush aside a warning on near-term rate hikes from Federal Reserve Chairman Jerome Powell.
Updated at 12:35 PM EST
Haven't we heard this before?
Stocks are doing their best to ignore yet another "I'll turn this car around *right now* if you don't behave" warnings from Federal Reserve Chairman Jerome Powell, with the S&P 500 adding to one of its strongest monthly gains on record heading into the mid-day session.
"Despite Chairman Powell’s efforts today at Spelman College to walk back Christopher Waller’s dovish comments, yields on the 2-year treasury remain on the low end as markets expect the Fed to end their tightening campaign," said Jeffrey Roach, chief economist for LPL Financial in Charlotte.
"Markets view today’s comments as inching toward the dovish camp. A few weeks ago, Powell said policy is restrictive but today, he believes policy is “well into restrictive territory," he added. "I think it’s fair for markets to latch on to that subtlety."
Benchmark 10-year notes are down nearly 8 basis points since Powell spoke, and were last marked at 4.25%, while stocks are adding to firm gains and trading at the highest levels of the session.
The S&P 500 is up 24 points, or 0.54%, while the Dow is up 250 points to a fresh January high. The Nasdaq is up 61 points, or 0.43%.
Updated at 11:22 AM EST
Stocks prefer honey to Powell's vinegar
Powell's attempt to push back on rate cut bets doesn't appear to be working, with Treasury yields rallying in the wake of his remarks to a event in Atlanta.
Powell said it's too early to speculate on when the Fed will begin cutting rates, and he warned that inflation risks could mean more hikes. But markets are holding to their view that slowing price pressures and a weakening economy will force his hand.
The S&P 500 was marked 5 points higher on the session following Powell's speech, while 10-year-note yields fell 5 basis points to 4.268%.
Related: Powell pushes back on rate-cut bets, says too early to speculate on next move
Updated at 10:49 AM EST
Tesla shares take a tumble
Tesla shares extended their Friday slide, and were last marked 2.6% lower on the session at $233.95 each, following last night's pricing reveal for the much-delayed Cybertruck.
While boasting impressive power and a undeniable place in the EV Zeitgeist, the Cybertruck won't come cheap, with a base model price of more than $60,000.
"I was waiting for this for four years, I was disappointed in the price," said Gene Munster of Deepwater Asset Management during an interview on CNBC, arguing Tesla could lose $40,000 per unit at the current pace of output at this price point.
Related: Tesla Unveils Cybertruck pricing with base model topping $60,000
Updated at 9:58 AM EST
Soft open
Stocks drifted modestly lower in early trading as a nudge higher in Treasury yields keeps investors on edge as they remain firmly focused on Powell's policy speech later in the session.
The S&P 500 was marked 4 points lower, or 0.08%, while the Dow gained 33 points and the Nasdaq slipped 44 points, or 0.3%.
Benchmark 10-year note yields were marked 2 basis points higher at 4.344% while 2-year notes were steady at 4.674%.
Updated at 8:15 AM EST
Trial and error
Pfizer (PFE) -) shares are a notable early-market mover, falling more than 4% after the drugmaker pulled a study of its developing obesity treatment following adverse reactions from patients in a phase II trial.
Related: Pfizer slumps after pulling obesity-drug study following patient reactions
Stock Market Today
Stocks last month booked their best monthly gain since July 2022, with the S&P 500 rising 8.51% on the back of a sharp pullback in Treasury bond yields, by some measures the strongest in two decades. Also helping: muted economic data that have built the case for an end to the Fed's 18-month interest-rate-hike cycle.
Bets on a spring rate cut, in fact, have moved forward to as early as March, with the odds of a 0.25-percentage-point reduction in the federal funds rate, currently set at between 5.25% and 5.5%, pegged at just under 47%.
Powell may opt to push against that optimism when he speaks later this morning at Spelman College in Atlanta. He might echo comments from some of his senior colleagues that he would need to see a longer stretch of benign inflation data, as well as rising unemployment, to justify an early-2024 rate cut.
Related: Recession is a long way off, and that means Fed rate cuts may be as well
Markets await manufacturing data
Benchmark 10-year-note yields, which fell nearly 60 basis points (0.6 percentage point) over the month of November, were little changed at 4.336% in early New York trading. Two-year notes held at 4.677% ahead of Powell's speech, and before two readings of November manufacturing activity coming just after the opening bell.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.08% higher in early trading at 103.580, following on from its 3.07% decline in November.
Global oil prices were mixed, with WTI crude trading modestly higher following yesterday's virtual OPEC summit. In that meeting cartel members failed to agree on a unified production cut but vowed to voluntarily reduce output over the coming months, led by Saudi Arabia, to bring crude markets back in balance.
Brent contracts for February delivery, the global pricing benchmark, slipped 33 cents in early New York trading to change hands at $80.54 per barrel while WTI contracts for December were down 23 cents at $75.73 per barrel.
The tech-focused Nasdaq, meanwhile, is looking at a 40 point decline, with Tesla (TSLA) -) slipping 1.34% following last night's pricing of its newly launched Cybertruck.
In European markets the Stoxx 600 rose 0.39% in early Frankfurt trading following data showing manufacturing activity data for last month remained firmly in contraction. That built investor bets that the European Central Bank will begin lowering its own policy rate as early as next spring.
Overnight in Asia, the regionwide MSCI ex-Japan index was marked 0.62% lower, paced by another day of declines for stocks in China. And Japan's Nikkei 225 ended a muted Friday session 0.17% lower at 33,431.51 points.
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