US: Stocks end higher ahead of Fed meeting

EQUITIES on Wall Street ended higher on Monday (May 2) even as the 10-year Treasury note’s yield hit 3 per cent for the first time in nearly 4 years ahead of the Federal Reserve’s expected rate hike.

With inflation at record highs and wages rising, the central bank is expected to increase the benchmark lending rate again, with a half-point step this time and more to come.

That aggressive posture has raised fears the Fed might overdo it and tip the world’s largest economy into recession.

Treasury yields are considered an early warning sign of a downturn, and the 10-year note, which has been steadily rising, went past 3 per cent before dipping back to end at 2.995 per cent.

“It was a long time coming,” Mazen Issa of TD Securities told AFP.

“We were used to a world with very low interest rates and we are in a new inflation paradigm where we’re reacclimating ourselves to how a higher yield world looks like.”

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The Fed’s job is complicated by factors outside US borders, including the war in Ukraine and ongoing Covid-19 lockdowns in China that threaten to exacerbate supply chain issues that have contributed to inflation.

Investors are skittish and stocks have been under pressure in recent weeks, but the Dow Jones Industrial Average gained 0.3 per cent to finish the session at 33,061.5, while the broad-based S&P 500 rose 0.6 per cent to 4,155.38.

The tech-rich Nasdaq Composite Index jumped 1.6 per cent to 12,536.02.

Amazon gained 0.2 percent after a bid to unionize a second New York warehouse failed. AFP