WSJ: U.S. Stocks Rebound as Market Accepts Fed Rate Hike Expectations, 10-Year Treasury Yield Nears 5%

BlockBeats news, September 12 — After U.S. August CPI data came in slightly above expectations, the market largely confirmed that the Federal Reserve will raise rates next week, which instead drove a rebound in U.S. stocks on Friday. Investors believe that a clear rate hike path helps reduce policy uncertainty and avoids more aggressive rate hike expectations in the future.

The S&P 500 rose 0.9% on Friday, the Dow gained about 1%, and the Nasdaq rose 1%, but all three major stock indexes still fell overall for the week. Meanwhile, the 10-year U.S. Treasury yield closed at 4.974%, approaching the 5% threshold and up noticeably from 4.783% a week earlier.

The market currently expects the Fed to raise rates by 25 basis points at next week's meeting. RBC Capital Markets even adjusted its rate cut expectation for this year to three rate hikes, arguing that high rates may further weigh on corporate earnings and equity valuations.

The energy market is also continuing to exert pressure. Brent crude closed at $104.61 per barrel on Friday, up more than 8% for the week. Houthi attacks on Saudi energy facilities, transportation risks in the Strait of Hormuz, and Saudi Arabia's closure of the East-West oil pipeline have all further intensified supply concerns.

Although market sentiment recovered somewhat on Friday, the simultaneous presence of high oil prices and high interest rates still means that U.S. stocks may remain highly volatile going forward. The core question on Wall Street has now shifted from "whether the Fed will raise rates" to "how long high rates will last and whether they can contain inflation without harming the economy and corporate earnings."