Stocks saw small gains in the final stretch of trading, with traders awaiting Jerome Powell’s remarks to see whether he’ll dampen Wall Street’s dovish narrative. Bonds rose in a busy week for debt sales.

While the pace of the equity rally waned, the S&P 500 saw its eighth straight up day. U.S. 10-year yields dropped to around 4.5 per cent after a US$40 billion auction — despite mixed metrics — which included a slightly higher-than-anticipated rate of 4.519 per cent: a sign that demand fell short of expectations. Thirty-year rates hit the lowest in over a month. Brent oil dipped below $80.

Treasury sales are exerting a growing sway over stocks. That’s the take from Citigroup Inc. data showing the S&P 500 has moved about 1 per cent in either direction on auction days since the start of 2022, eclipsing the prior decade’s average. Their analysis leaves traders on high alert for Thursday’s $24 billion sale of 30-year bonds.

Wall Street is also keeping a close eye on Fedspeak. Speaking briefly on Wednesday, Powell didn’t comment on the outlook for interest rates. He’ll likely have more time to express his views on Thursday during a panel on monetary policy challenges.

“It will be interesting to hear if he makes any comments about the recent move in longer-term interest rates,” said Matt Maley at Miller Tabak + Co. “If his tone is a bit more hawkish than it was last week, it could be a catalyst for the kind of ‘breather’ in the markets we’re thinking could/should take place.”

Swap traders are pricing in almost no chance of an interest-rate increase in December, and predict the current level of the Fed’s benchmark rate — 5.25 per cent to 5.5 per cent — will mark the peak of the tightening cycle.

Even if central banks were of the view that rates could fall next year, it would be unrealistic to expect them to say so at this stage as it would confuse and undermine their message that rates must stay higher for longer, according to Craig Erlam, senior market analyst at Oanda.

“We are continuing to see sluggish trade in equity markets on Wednesday, with investors battling hawkish commentary from central banks against downbeat economic expectations and speculation around rate cuts next year,” Erlam noted.

UBS Group AG strategists expect the S&P 500 to end 2024 around 4,600 points — implying an upside of only about 5 per cent from current levels — as they see weaker growth hurting revenues. Profit margins face headwinds including negative operating leverage, sticky wages, deteriorating pricing power and rising interest expense, Jonathan Golub and Patrick Palfrey wrote.

Traders are hedging their bets on big tech after a rally that drove the Nasdaq 100 to its longest winning run since November 2021. The cost of options to protect against Alphabet Inc. falling 10 per cent in two months jumped to a two-year high relative to contracts betting on a 10 per cent gain. For Microsoft Corp. and Apple Inc., the skew is the steepest since May.

Meantime, Hoisington Investment Management Co.’s chief economist Lacy Hunt sees the recent retreat in Treasury yields as the start of a rally that will gain steam once the U.S. economy careens into a hard landing.

For the bond market, “the cloud is breaking because the economy is heading into a hard landing,” Hunt said in an interview on Bloomberg Television. “But it’s a process that will take time. The U.S. economy has very serious difficulties” that will “be with us for a long time in the future.”

Corporate Highlights:

• Eli Lilly & Co. won U.S. approval for its diabetes drug to treat obesity, unlocking blockbuster sales potential in a market that’s expected to hit $100 billion by 2030.
• EBay Inc. issued a bleak revenue outlook for the busy holiday quarter, suggesting the company continues to struggle as it loses shoppers to larger rivals such as Amazon.com Inc. and Walmart Inc.
• Robinhood Markets Inc. reported revenue that missed estimates as lower cryptocurrency volumes tumbled.
• Rivian Automotive Inc. ended an exclusivity agreement to sell battery-electric vans to Amazon.com Inc. as the automaker raised its forecast for its overall production this year.
• Rockstar Games, a division of Take-Two Interactive Software Inc., confirmed it will begin promoting a new Grand Theft Auto game next month.
• Roblox Corp., the video-game platform popular among teenagers, posted third-quarter bookings and revenue that far exceeded Wall Street’s projections.
• Teva Pharmaceutical Industries Ltd., one of Israel’s largest companies, increased its revenue guidance for the second straight quarter, saying medicine production hasn’t been significantly affected by the war with Hamas.
• Warner Bros. Discovery Inc. reported a significant decline in network advertising as a result of the Hollywood strikes and the ongoing bleeding of traditional TV subscribers.

Key events this week:

• Bank of Japan issues October summary of opinions, Thursday
• BOE chief economist Huw Pill speaks on the economy, Thursday
• U.S. initial jobless claims, Thursday
• Fed Chair Jerome Powell participates in panel on monetary policy challenges, Thursday
• Atlanta Fed President Raphael Bostic and his Richmond counterpart Tom Barkin speak, Thursday
• ECB President Christine Lagarde participates in fireside chat, Friday
• U.S. University of Michigan consumer sentiment, Friday
• Dallas Fed President Lorie Logan and her Atlanta counterpart Raphael Bostic speak, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.1 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 0.1 per cent
• The Dow Jones Industrial Average fell 0.1 per cent
• The MSCI World index was unchanged

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0710
• The British pound was little changed at $1.2288
• The Japanese yen fell 0.4 per cent to 150.99 per dollar

Cryptocurrencies

• Bitcoin rose 0.4 per cent to $35,630.73
• Ether rose 0.2 per cent to $1,896.3

Bonds

• The yield on 10-year Treasuries declined five basis points to 4.51 per cent
• Germany’s 10-year yield declined four basis points to 2.62 per cent
• Britain’s 10-year yield declined three basis points to 4.24 per cent

Commodities

• West Texas Intermediate crude fell 2.3 per cent to $75.59 a barrel
• Spot gold fell 1 per cent to $1,949.67 an ounce