SP 500 climbed above 4,000 on risk appetite improvement and higher US bond yields

• The S&P 500, the Dow Jones, and the Nasdaq 100 advanced sharply in the day.
• US Treasury bond yields climbed ahead of the FOMC’s meeting.
• Investors focus shifted toward the Federal Reserve’s monetary policy decision.

Wall Street finished the day with gains, spurred by optimism in the financial markets, which triggered gains in the S&P 500, the Dow Jones, and the heavy-tech Nasdaq Composite. As the New York session ended, the S&P 500 gained 1.3%, 4,002.87, while the Dow Jones climbed 0.98%, 32,560.60. The Nasdaq Composite led the pack, up 1.58%, at 11,860.11.

US equities rose, sponsored by a risk-on impulse

Investors had shrugged off the banking system’s woes. On Tuesday, the Secretary of Treasury Janet Yellen stated that if regulators perceive a potential run on the banking system, the federal government could intervene to safeguard depositors at more banks. Data-wise, Existing Home Sales in the United States (US) rose above the prior’s month figures as lower mortgages boosted sales. Existing Home Sales in February rose by 14.5% MoM, crushing the 5% consensus, and ended a 12-month run of declines in sales.

Aside from this, US Treasury bond yields jumped, with 2s and 10s gaining 18 and 12 basis points, respectively, ahead of tomorrow’s Federal Reserve’s decision. The US 2-year Treasury bond yield is 4.179%, while the 10-year rate is 3.607%.

Traders focus shifted toward the US Federal Reserve monetary policy decision, with investors expecting a 25 bps rate hike by the Fed. However, tomorrow’s spotlight would be Fed Chair Jerome Powell’s press conference, which would be scrutinized by investors expecting Powell to deliver any forward guidance.

Sector-wise, Energy, Consumer Discretionary, and Financials led the pack, each up 3.45%, 2.71%, and 2.54%. Contrarily, Utilities, Real Estate, and Consumer Staples finished with losses of 2.05%, 0.66%, and 0.12%m respectively.

In the FX space, the US Dollar Index (DXY), a measure that tracks the buck’s value against a basket of six currencies, lost 0.09%, down at 103.214, after hitting a YTD low of 103.000.

What to watch?

The US calendar will feature the Federal Reserve Open Market Committee (FOMC) monetary policy meeting, alongside the Fed Chairman Jerome Powell press conference, at around 18:00 and 18:30 GMT.

S&P 500 Daily chart