CNBC Daily Open: A Fed Official's Comments Gave Markets the Confidence to Rally

Elijah Nouvelage | Bloomberg | Getty Images

This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Markets overcame fears of higher rates to stage a last-minute rally.

What you need to know today

  • U.S. Treasury yields climbed to new heights. The yield on the 10-year Treasury breached 4% and settled at 4.062%. The 2-year yield was 4.889%, a rate not seen in more than a decade.
  • Headline inflation in the EU slowed to 8.5% in February, but that's more than the 8.2% economists had expected. It's likely the European Central Bank will continue raising interest rates aggressively.

The bottom line

Markets digested mixed messages on Thursday and eventually overcame fears of higher rates to stage a last-minute rally.

Early in the day, the U.S. Labor Department reported labor costs jumped 3.2% in the fourth quarter, two times what analysts had estimated. Meanwhile, weekly jobless claims fell by 2,000 to 190,000, which was below the expectation of 195,000. The data suggested an employment market that, somewhat astoundingly, is still robust, which might prompt the Federal Reserve to increase rates when it meets later this month. Markets opened lower on the news.

Yet markets' fears were allayed mere hours later when Atlanta Federal Reserve President Raphael Bostic told the media he's in favor of lower — and slower — rate hikes. "Right now I'm still in very firmly in the quarter-point move pacing," Bostic said, adding that "slow and steady" is his preferred course of action. His comments came after other Fed officials had expressed a distinctly more hawkish tone in recent days, and what he said helped to turn around market sentiment on Thursday.

The S&P 500 added 0.76%, the Nasdaq Composite rose 0.73% and the Dow popped 1.05%, helped by a 11.5% jump in Salesforce. Despite the gain, the S&P 500, in particular, appears to be on unsteady ground, writes CNBC's Patti Domm. The index has been hovering around its 200-day moving average, which is viewed as an indicator of the health of a stock or index. If the S&P drops below that level, fears in the market could trigger more selling. For now, however, all major indexes are on track for a winning week.

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