NEW YORK - Global stock indexes edged higher while Treasury yields slipped on Wednesday as investors tried to assess the timing of possible interest rate cuts from the Federal Reserve, while the dollar eased off of a three-month peak against the yen.
Japan's top currency officials warned against what they described as rapid and speculative yen moves overnight.
Nvidia shares rose 2.5 per cent and the dominant AI chip maker overtook Alphabet's market capitalization. Nvidia, which reports quarterly results next week, now has a stock market value of US$1.825 trillion.
Yields briefly extended declines after Chicago Fed President Austan Goolsbee said the Fed's path to its 2 per cent inflation target rate would remain on track even if price increases run a bit hotter than expected over the next few months, and the central bank should be wary of waiting too long before cutting interest rates.
Market expectations for a cut by the Fed in June of at least 25 basis points stand at 78.5 per cent, according to CME's FedWatch Tool, while expectations for a cut in May have fallen to 38.5 per cent, down from 63.7 per cent a week ago.
An upside surprise in U.S. inflation on Tuesday showed the consumer price index (CPI) rose 3.1 per cent on an annual basis, above forecasts for a 2.9 per cent increase.
With the CPI report, "it wasn't as if inflation held, it was that it accelerated, and that was what got the market. Suddenly the expectations (on possible rate cuts) pulled back even more," said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.
"Every data release is now viewed through the eyes of the Fed. The market wants to know when is the Fed going to feel comfortable about cutting rates and initiating a rate cut regime," Krosby said.
Thursday brings U.S. retail sales data, while on Friday the U.S. producer price index report will be released.
The Dow Jones Industrial Average rose 151.52 points, or 0.40 per cent, to 38,424.27, the S&P 500 gained 47.45 points, or 0.96 per cent, to 5,000.62 and the Nasdaq Composite gained 203.55 points, or 1.30 per cent, to 15,859.15.
MSCI's gauge of stocks across the globe rose 5.37 points, or 0.73 per cent, to 744.95, while Europe's STOXX 600 index rose 0.5 per cent. Japan's Nikkei, which hit its highest in 34 years on Tuesday, fell 0.7 per cent.
The yield on the 10-year Treasury note fell 5 basis points to 4.267 per cent after touching 4.332 per cent earlier in the session, its highest since Dec. 1.
The dollar index fell 0.13 per cent at 104.72 as investors consolidated gains, while the euro up 0.15 per cent at 1.0725. Against the Japanese yen, the dollar weakened 0.12 per cent at 150.61. The dollar was at a three-month peak against the yen on Tuesday.
The 150 level on the pair has been seen in the past as a potential catalyst for intervention by Japanese monetary authorities. It was just past this level that they intervened to shore up the yen in late 2022.
In cryptocurrencies, bitcoin gained 4.16 per cent at US$51,626.95.
Oil futures declined as higher U.S. crude inventories weighed on prices. U.S. crude lost US$1.23 to settle at US$76.64 a barrel and Brent fell US$1.17 to settle at US$81.60.
Spot gold was steady at US$1,991.92 per ounce. - Reuters
