# Wall Street stocks power higher as Treasury yields and dollar ease
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-03
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Investor Optimism Leads to Strong Market Gains on Wall
Meta Description: Latest data shows U.S. economic growth, boosting Wall Street stocks. Treasury yields decline while dollar retreats. Positive market sentiment continues.
URL: https://financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-easehtml

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By Lawrence Delevingne and Elizabeth Howcroft

(Reuters) – Wall Street stocks posted strong gains while Treasury yields and the dollar pulled back on Friday as data pointing to U.S. economic growth boosted risk appetite, even as expectations for rate hikes kept [bond yields](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") near multi-year highs.

The U.S. services sector grew at a steady clip in February, with new orders and employment rising to more than one-year highs, [suggesting the economy](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") continued to expand in the first quarter.

U.S. [shares jumped](https://www.financedigest.com/ericssons-provision-for-u-s-probe-hints-of-smaller-fine-shares-jump.html "Ericsson’s provision for U.S. probe hints of smaller fine, shares jump"), with the Dow Jones Industrial Average up 1.17%, the S&P 500 1.61% higher, and the Nasdaq Composite adding nearly 2%.

Following weeks of relentless upward pressure on interest rates, the S&P 500 got a bit of a reprieve today,” said Bill Sterling, [global strategist at GW&K Investment](https://www.financedigest.com/volkswagen-to-invest-in-mines-in-bid-to-become-global-battery-supplier.html "Volkswagen to invest in mines in bid to become global battery supplier") Management in Boston.

He added that the small differential between shorter-term bonds indicated lower recession risk: [“Market participants seem to be saying that the economy – and corporate profits](https://www.financedigest.com/compelling-tips-to-make-profitable-investments-in-the-stock-market.html "Compelling Tips to Make Profitable Investments in the Stock Market") – can withstand a higher-for-longer interest rate path.

Asian [stocks already jumped on investor](https://www.financedigest.com/influx-of-one-time-investors-swapping-stocks-for-bricks-and-mortar-reports-agency.html "Influx of ‘one-time’ investors swapping stocks for bricks and mortar reports agency") optimism of a Chinese economic rebound. The positive market [sentiment continued during the European](https://www.financedigest.com/european-junk-debt-sales-spring-back-to-life-as-sentiment-improves.html "European junk debt sales spring back to life as sentiment improves") session, with Europe’s STOXX 600 up 0.92%.

The recovery in euro zone business activity gathered pace last month, PMI survey [data showed, in the latest piece of data to suggest the bloc would avoid](https://www.financedigest.com/the-race-to-avoid-data-dinosaur-extinction.html "THE RACE TO AVOID DATA DINOSAUR EXTINCTION") a recession.

But euro zone government bond yields were still near their highest levels in years after euro zone [inflation data on Thursday drove market expectations](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected") for the European Central Bank’s (ECB) terminal rate to around 4%.

At 2.688%, the benchmark 10-year [German yield](https://www.financedigest.com/german-yields-steady-spreads-tighten-after-recent-repricing.html "German yields steady, spreads tighten after recent repricing") was near its highest level since 2011.

U.S. [Treasury yields](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") paused their rally. The U.S. 10-year [Treasury yield](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") fell to 3.960%, down from Thursday’s high of 4.091%. The two-year [Treasury yield](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom"), which typically moves in step with interest rate expectations, dipped 4.3 basis points at 4.859%.

Federal Reserve Bank of Boston President Susan Collins reiterated in comments [made](https://www.financedigest.com/fintech-v-the-banks-uneasy-bedfellows-or-a-match-made-in-heaven.html "FinTech v the Banks: Uneasy Bedfellows or a Match Made in Heaven?") public Friday that more central bank rate rises will be needed to lower high inflation levels.

Investors are trying to gauge that exact path for Federal Reserve [rate hikes](https://www.financedigest.com/sp-warns-of-possible-economic-blow-hit-to-japan-inc-from-boj-rate-hike.html "S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike"), after strong U.S. [data in recent weeks](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week") suggested rates may need to be higher for longer.

Our overall view is still more consistent with slow disinflation amid some further improvement to global growth,” Goldman Sachs market strategists wrote in a [note late](https://www.financedigest.com/in-loving-and-devoted-memory-king-charles-handwritten-note-to-late-queen.html "‘In loving and devoted memory’: King Charles handwritten note to late queen") Thursday. That mix should maintain the upward [pressure on yields but ultimately limit the damage to equities](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold") and provide an overdue tailwind to commodities.

The MSCI world equity index, which tracks shares in 47 countries, [jumped 1.47% on the day](https://www.financedigest.com/uk-retailers-see-40-jump-in-boxing-day-shoppers-springboard.html "UK retailers see 40% jump in Boxing Day shoppers -Springboard"), up 5.8% for the year.

[DOLLAR RETREATS](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down")

The euro ticked up 0.33% on the day, while the U.S. dollar slid from a 2-1/2-month high versus the Japanese yen on Friday, its [largest weekly loss since](https://www.financedigest.com/first-quarter-dash-for-cash-largest-since-early-2020-bofa.html "First quarter ‘dash for cash’ largest since early 2020 -BofA") mid-January against a basket of six major currencies.

Analysts polled by Reuters were unfazed by the dollar’s recent strength, up about 7% over the last 12 months, and predicted a weaker greenback in a year amid an improving global economy and expectations the [Fed will stop hiking interest rates](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May") well ahead of the ECB.

[Oil prices](https://www.financedigest.com/oil-prices-steady-after-u-s-stockpile-swell.html "Oil prices steady after U.S. stockpile swell") rose, recovering from an early slump after Reuters reported that the United Arab Emirates is not planning an exit from the Organization of Petroleum Exporting Countries (OPEC). U.S. crude rose 2% to $79.73 per barrel and Brent was at $85.86, up 1.31% on the day.

Spot gold added 1% to $1,854 an ounce.

Bitcoin was down nearly 5% at around $22,381, its lowest [price since](https://www.financedigest.com/birmingham-led-uk-house-price-growth-since-brexit-vote.html "Why has Birmingham led UK house price growth since the Brexit vote?") Feb. 15.

(Reporting by Lawrence Delevingne in Boston and [Elizabeth Howcroft in London; Editing by Alex Richardson, Leslie Adler, Hugh Lawson and Deepa Babington)](https://www.financedigest.com/34315plane-carrying-coffin-of-queen-elizabeth-lands-in-london.html "Plane carrying coffin of Queen Elizabeth lands in London")


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