- US stocks jumped on Friday in a bid for a three-day rally as both the US dollar and Treasury yields moved lower.
- A period of consolidation in both yields and the dollar could be on the horizon following their strong moves higher, according to Fairlead's Katie Stockton.
- "A short-term shift is likely on the macro front, with the dollar and Treasury yields poised to consolidate for a couple weeks," she said.
US stocks moved higher on Friday, paving the way for a three-day rally as both the US dollar and Treasury yields took a breather from their recent surges and moved lower.
A declining dollar is a boon for US stocks, especially multinational stocks that have high costs in the US but sell a lot of their products overseas. Meanwhile, a decline in Treasury yields often helps boost growth stocks as the cost of capital moves lower.
But the declines are relatively small when accounting for their multi-month rallies. The US dollar index is down just 1.5% from its recent cycle high of $110.70. Meanwhile, the 10-year US Treasury yield has fallen about 10 basis points from its recent high to 3.25%.
Here's where US indexes stood shortly after the 9:30 a.m. ET open on Friday:
- S&P 500: 4,035.01, up 0.72%
- Dow Jones Industrial Average: 31,974.80, up 0.63% (200.28 points)
- Nasdaq Composite: 11,980.39, up 1.00%
But even small moves lower in both the US dollar and Treasury yields could have a big impact on different asset classes, according to Fairlead Strategies' Katie Stockton.
"A short-term shift is likely on the macro front, with the dollar and Treasury yields poised to consolidate for a couple weeks," she said in a Friday note to clients.
Billionaire investor Bill Gross is betting on the British pound to rise against the dollar, as he expects the gaping US trade deficit and a premature end to the Federal Reserve's interest-rate hikes to weigh on the American currency.
Some of the world's best investors are cashing out their iconic bets on technology stocks from China, in the face of tightening regulations, disruptive COVID-19 lockdowns, and mounting economic challenges in the country.
Digital World Acquisition moved higher after the SPAC was granted more time to gather shareholder approval to extend its merger deadline with Donald Trump's Truth Social.
West Texas Intermediate crude oil jumped 2.85% to $85.92 per barrel. Brent crude, oil's international benchmark, rose 2.92% to $91.75.
Bitcoin climbed 4.95% to $20,931. Ether prices rose 2.20% to $1,708.
Gold ticked up 0.47% to $1,728.20 per ounce. The yield on the 10-year Treasury fell 7 basis points to 3.25%.