Economy

Wall Street advances on gains in tech

Wall Street advances on gains in tech

Market participants are largely expecting the Fed to raise rates three times this year, beginning with its next meeting in March.

Gold futures were slightly lower Friday as the Federal Reserve issued its monetary policy report to Congress. But it said the rate was likely to remain low enough to stimulate the economy over the next two years.

Bullard told CNBC on Thursday that central bankers need to be careful not to increase interest rates too quickly this year because that could slow the economy too much.

In a speech to the conference hosted by the University of Chicago Booth School of Business, Krugman said every recession since 1982 has been caused by "private sector over-reach" and not Fed tightening, as in decades past. "This suggests to me that it may be appropriate later this year to begin an assessment of our current monetary policy framework and alternatives".

Stocks fear higher interest rates because if they get high enough they compete for investment dollars and make interest rates higher for businesses and investors.

Trading activity may be somewhat subdued, however, as a lack of major USA economic data is likely to keep some traders on the sidelines.

The more upbeat take on inflation in the minutes of the January 30-31 meeting will likely further cement expectations that new Fed chief Jerome Powell will lead his colleagues in raising interest rates next month. While the French CAC 40 Index is down by 0.5%, the German DAX Index is down by 0.8% and the UK's FTSE 100 Index is down by 1%. The Fed had pushed the rate to a record low near zero in December 2008 as it struggled to contain a severe financial crisis and the deepest economic downturn since the Great Recession of the 1930s.

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"To the extent that they hint at any concern that's greater than in the past about wages and inflation, that would be a source of concern to the markets".

MSCI's gauge of stocks across the globe gained 1.14 percent, with the pan-European FTSEurofirst 300 index rising 0.23 percent and emerging market stocks up 1.29 percent.

Looking ahead, markets were awaiting a release from a report on monetary policy at 11 a.m. It partially attributed the strong stock gains previous year and into January to investor anticipation of a boost to after-tax earnings from corporate tax cuts that were included in the tax bill Congress passed in December.

His audience will include investors who unceremoniously greeted his early tenure with one of the fastest 10.0 percent falls in Wall Street stocks in history this month.

His words come as USA jobless claims have dropped to just above their 45-year-low, and the solid manufacturing and consumer sectors suggest that inflation is set to gain momentum.

For one, the minutes said a majority of the Fed's rate-setting group saw stronger growth lifting chances of further rate hikes.

Policy makers signaled growing confidence in the economy when they last met, according to minutes from the January 30-31 session, and several believed the economy was set to grow even faster than when they boosted their growth projections in December. The development, combined with the stimulus expected from the US tax cuts passed in December, had raised prospects for solid growth in 2018 and further interest rate increases.


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