New York Market: Shares soar as rate fears recede

US stock and bond markets boomed last week and the rally is likely to continue in after a report on jobs and wages in February reduced concerns that the Federal Reserve will soon raise interest rates.

Treasury bonds ended a five-week rout in dramatic fashion on Friday by staging the biggest rally in five months after the government said hourly earnings barely rose in February. The report boosted optimism for tame inflation, even as the economy added 275,000 jobs.

US 30-year Treasury bonds rose $14.69 per $1,000 security. Yields fell to 5.59 per cent, after reaching 5.72 per cent, the highest level since July 1997.

The jobs report also set US stocks alight. The Dow Jones Industrial Average rose 2.8 per cent, to a record high of 9,736.08. The surge, the Dow's biggest one-day rise since 15 October, pushed the index to within 3 per cent of the 10,000 level.

"The economy is still in a sweet spot," said Daniel Eagan, who helps oversee $120bn at BlackRock, the Philadelphia- based asset management arm of PNC Bank. "The market likes this."

Investors said recent news about robust growth with scant inflation may spell the end of the rout that had pushed the Dow index down as much as 5.5 per cent from its 1999 high on 8 January and lifted Treasury yields as much as 62 basis points since 29 January. February was the worst month for bonds in 19 years, according to Ryan Labs, a research firm.

Treasuries sank in recent weeks as reports on consumer confidence, manufacturing and jobs showed economic strength, spurring concerns that the Fed might raise interest rates to keep inflation from accelerating. Even after Friday's rally, investors who bought 30-year bonds on 29 January are sitting on a loss of about 7 per cent, according to Bloomberg.

The employment report didn't dispel the perception that the economy is booming. Yet the small rise in wages suggested inflation isn't about to quicken. Consumer prices rose just 1.7 per cent in the 12 months to January, near the slowest pace in 12 years.

The report "was a relief valve for the market", said John Boritzke, who helps oversee $9bn at M&I Investment Management in Milwaukee. "It's reassuring that the Fed doesn't have to tighten rates."

A report in Business Week also soothed investors' worries. It said Fed Chairman Alan Greenspan doesn't see much reason to boost interest rates because he's concerned a new financial shock could send the global economy reeling again.

Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
There have been various incidents of social media users inadvertently flouting the law

footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League
Life and Style

Board creates magnetic field to achieve lift

Renee Zellweger as Bridget Jones
Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
ebooksAn unforgettable anthology of contemporary reportage
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Arts and Entertainment
Life and Style
Designer Oscar de la Renta takes a bow after showing his Spring 2015 collection in September, his last show before his death
fashionThe passing of the legendary designer has left a vacancy: couturier to America’s royalty, says fashion editor Alexander Fury
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are