Wall Street braces for weekly gains as yields fall

March 3 (Reuters) – U.S. stock indexes edged up on Friday for weekly gains as Treasury yields took a breather from a week-long rally sparked by concerns that the Federal Reserve would hold interest rates longer. Will keep till inflation.

Businesses tumbled this month after economic data pointed to rising raw material costs and a resilient labor market, indicating the US central bank still hasn’t seen the desired effect of its monetary policy on inflation.

US 10-year Treasury yields fell on Friday after touching a four-month high in the previous session, but hovered near the 4% level.

The Institute for Supply Management survey shows the US services sector expanded at a steady pace in February, with new orders and employment rising to higher levels in more than a year, suggesting the economy continued to expand in the first quarter Stayed.

“The ISM (survey) arguably came in closer to expectations, but it still signals growth,” said John Augustine, chief investment officer at Huntington National Bank.

“It’s a surprise to see long-term yields down today, but recessionary fears appear to be waning and expectations of Fed tightening have not changed.”

U.S. stocks closed higher on Thursday after Atlanta Fed President Rafael Biostic said the impact of higher rates on the economy could only begin to “bite” in earnest this spring, marking a “stable” quarter for the Fed. There is an argument for increasing point rates.

The three main indexes were set for weekly gains, with the Dow set for its first weekly rise in five.

Aggressive comments from Fed policymakers and recent economic data have pushed traders to price hikes of at least three more 25 basis points this year and see interest rates hiked to 5.46% by September from 4.66% currently.

The odds of a 50 basis point hike in March were only 20%, but investors await monthly payrolls and consumer price data to see whether the Fed will do larger later this month.

In its latest semiannual report to Congress on monetary policy and the economy, the Fed is “seriously aware” of the challenges high inflation poses to the economy and remains “firmly committed” to its 2% target.

At 11:56 a.m., the Dow Jones Industrial Average (.DJI) was up 221.75 points, or 0.67%, at 33,225.32, the S&P 500 (.SPX) was up 41.12 points, or 1.03%, at 4,022.47 and the Nasdaq was up . The Composite (.IXIC) was up 148.13 points, or 1.29%, at 11,611.12.

The S&P 500 was trading above its 200-day moving average, seen by traders as a key support level for the second session.

Apple Inc (AAPL.O) rose 2.7% after Morgan Stanley said the stock could rally more than 20% this year on potential hardware subscriptions.

Meanwhile, Costco Wholesale Corp (COST.O) slipped 3.1% as the membership-only retail chain missed second-quarter revenue estimates as consumers cut spending amid high inflation.

Broadcom Inc (AVGO.O) rose 4.8% after the chipmaker reported second-quarter revenue that topped analysts’ estimates as increased investment in AI boosted demand for chips.

Advancing issues outnumbered the 3.83-to-1 ratio on the NYSE and the 1.92-to-1 ratio on the Nasdaq.

The S&P Index posted 17 new 52-week highs and two new lows, while the Nasdaq posted 59 new highs and 43 new lows.

Reporting by Shruti Shankar in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguly

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