Stocks, Bonds Rise After Fed-Day Drop as Oil Falls: Markets Wrap
(Bloomberg) — Stocks joined bonds higher as falling oil prices lent support to optimism that inflation can be kept under control a day after the Federal Reserve raised interest rates for the first time since 2023.
Equities notched their biggest gain in six weeks, with the S&P 500 up 1.1%. The tech-heavy Nasdaq 100 added 1.7%. A key gauge of chipmakers climbed 3.1%. Treasury 10-year yields dropped from the highest level since 2007, snapping an eight-day rising streak. The dollar was little changed. Gold climbed. Brent crude settled under $105.
“Sentiment has been lifted in part because crude oil has fallen for a second day, easing pressure on bond yields,” said Fawad Razaqzada at Forex.com. “Yesterday, the Fed was quite hawkish, and we saw the kind of reaction it triggered in the foreign-exchange and equity markets as you’d expect.”
The post-Fed stock decline was an “overreaction,” creating a buying opportunity, according to Bob Edwards, chief investment officer at Edwards Asset Management.
“Now that we are past this rate hike, stocks can move on, as uncertainty has faded,” he said. “I don’t see the need to stack additional rate hikes on top of Wednesday’s just to prove a point, but the Federal Reserve is going to follow what it deems necessary.”
“Ultimately, we expect that the economic data will hold greater sway over the direction of Fed policy,” said Ian Lyngen at BMO Capital Markets. “As investors continue to digest the forward implications of the Fed back in tightening mode, we are increasingly constructive on duration and anticipate that yields will leak lower in the coming weeks.”
Unless energy prices increase materially, headline inflation is likely to be much closer to target by next spring, according to Tiffany Wilding at Pacific Investment Management Co. Going forward, this may alleviate some pressure on the Fed, she said.
Economic strength makes tightening more manageable, and strong earnings can counter elevated yields, according to Mark Haefele at UBS Global Wealth Management.
“We remain positioned for further equity gains while preparing for near-term volatility,” he said. “If tightening remains measured, credit spreads remain stable, and profits continue to grow, the rally should have scope to broaden across sectors and regions.”
Elsewhere, the Bank of England gave Britain’s bond market some needed relief with an overhaul of its plan for selling off excess gilts that piled up on its balance sheet in the previous decade. The Bank of Japan is set to hike Friday, delivering its most closely spaced rate increases since 1990 amid inflation risks.
Corporate Highlights:
Nvidia Corp. Chief Executive Officer Jensen Huang expects to sell twice as many chips in the coming year, fueled by the spread of artificial intelligence across different industries. Generac Holdings Inc. agreed to supply up to $8 billion worth of generators for Amazon.com Inc.’s data centers and issued a warrant for a stake in the company. CoreWeave Inc., a provider of computing that powers AI systems, kicked off a fresh round of fundraising that includes a $3 billion convertible bond issue and a vehicle for potential share sales. Wall Street firms are positive on Ciena Corp. after the communications equipment company hosted an analyst meeting where it gave growth targets that are seen as positive. General Motors Co. made its first delivery of Patriot missile parts to Lockheed Martin Corp. less than a month after forming a partnership, a sign that the automaker is pushing to help the defense industry rapidly rebuild the nation’s ammunition stock. Lucid Group Inc.’s chief executive officer said the electric-vehicle maker has finalized its work with restructuring advisers, a sign that the troubled company has a clearer path to turn around its operations. What Bloomberg Strategists say…
“The Fed chairman’s message was clear: A booming US economy and above-target inflation require more restrictive policy. That may remain a problem for bonds in the medium-term, despite Thursday’s relief rally aided by lower oil prices.”
—Edward Harrison, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 1.1% as of 4 p.m. New York time The Nasdaq 100 rose 1.7% The Dow Jones Industrial Average rose 0.6% The MSCI World Index rose 0.9% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1478 The British pound fell 0.2% to $1.3357 The Japanese yen rose 0.2% to 155.98 per dollar Cryptocurrencies
Bitcoin rose 0.6% to $76,579.13 Ether rose 1.7% to $2,450.76 Bonds
The yield on 10-year Treasuries declined nine basis points to 4.93% Germany’s 10-year yield declined three basis points to 3.48% Britain’s 10-year yield declined seven basis points to 5.22% Commodities
West Texas Intermediate crude fell 1.3% to $101.10 a barrel Spot gold rose 1.9% to $4,345.52 an ounce ©2026 Bloomberg L.P.
