Stocks Climb 'Wall of Worry' With S&P Near 5,000

The S&P 500 came within a striking distance of its 5,000 milestone as tech megacaps rallied and a strong sale of 10-year Treasuries dimmed supply concerns. Bonds were little changed.

Equities extended a torrid surge from their October 2022 lows on prospects that a solid economy will continue fueling corporate earnings.

Traders shrugged off concerns about lofty valuations, February’s weak seasonality and cautious commentary from Federal Reserve officials — with stocks hitting all-time highs. Not even fresh volatility in New York Community Bancorp, which has unsettled investors over the past week, was able to deter equity bulls.

“The market continues to climb the wall of worry, including shifting Fed expectations, geopolitical tension, and overbought market conditions,” said Mark Hackett at Nationwide. “We are entering a sluggish seasonal period, but the market has strong momentum.”

The U.S. government sold a record $42 billion of 10-year notes Wednesday at a lower-than-anticipated yield, a sign of investor confidence that the Fed will pivot to interest-rate cuts this year in response to a growth slowdown.

The notes were awarded at 4.093%, compared with a when-issued yield of about 4.105% moments before 1 p.m. New York time, the bidding deadline. The lower yield indicates stronger demand than traders anticipated.

“The 10-year note auction was pretty good,” said Peter Boockvar, author of the Boock Report. Also on Wall Street’s radar was a raft of central bank speakers — all signaling no rush to cut rates.

Fed Governor Adriana Kugler presented an optimistic case for a continued slowdown inflation while indicating little urgency to reduce borrowing costs.

Fed Bank of Boston President Susan Collins said she’s looking for more evidence that inflation is durably set to align with the target before moving to cut rates — though that step is likely “later this year.” Her Minneapolis counterpart Neel Kashkari told CNBC that said officials need to see “a few more months” of inflation data before easing policy.

“Our base case is still for a soft landing where growth slows throughout the year, but remains healthy overall, while inflation does not prove to be overly sticky,” said Solita Marcelli at UBS Global Wealth Management. “And we do believe this environment will allow the Federal Reserve to start cutting rates by May, and by 100 basis points through year-end.”

Following the steps of all major U.S. equity benchmarks, the MSCI World Index of developed-market shares also rose to a record.