Wall Street rallies on tech boost, European shares end flat

The euro retreated as the European Central Bank tried to cool interest rate hike expectations.

Wall Street shares shook off a groggy start and early losses as Apple Inc, Microsoft Corp and Amazon.com Inc jumped. Shares of bank stocks including Bank of America Corp, JPMorgan Chase & Co and Wells Fargo added over 1% each ahead of a U.S. inflation reading due this week.

The Dow Jones Industrial Average rose 1.06% to end at 35,462.78 points. The S&P 500 gained 0.84% to 4,521.52.

The Nasdaq Composite climbed 1.28% to 14,194.46.

A jump in U.S. Treasury yields lifted bank stocks on Wall Street. Shares of Bank of America Corp BAC.N, JPMorgan Chase & Co JPM.N and Wells Fargo WFC.N all gained over 1%.

Europe’s benchmark STOXX 600 finished flat with tech stocks among the weakest performers, pressured by rising bond yields. Oil and gas stocks sank 1.8%, tracking a drop in crude prices. FTSE-listed BP fell over 2% even after reporting a $12.8 billion annual profit. [.EU]

The MSCI world equity index rose 0.52%.

“Earnings season has been top of mind for market participants for the past few weeks. Results have been, on balance, better than estimates,” Art Hogan, chief market strategist at National Securities in New York, said in a note.

“As we wrap up the earnings season this week, investors focus will likely shift from the micro corporate earnings to the macro like the Federal Reserve, particularly pertaining to the pace of interest-rate rises and how to manage the balance sheet,” Hogan added, pointing to expectations for as many as five Fed rate hikes.

LAGARDE COMMENTS

The euro weakened for a second straight day, pressured by comments on Monday from ECB President Christine Lagarde that there was currently no need for major tightening.

Currency and bond market traders are focused on which central banks will hike interest rates fastest and furthest this year following the rapid rise in global inflation.

The euro was down 0.21 percent, at $1.1418 by 4:25 p.m. EST (2125 GMT).

The dollar index, which tracks the greenback versus a basket of six currencies, gained 0.198 points or 0.21 percent, to 95.597.

The yen rose 0.34 percent, at $115.5100.

The benchmark 10-year U.S. Treasury yield hit its highest since November 2019 on Tuesday, ahead of a key inflation reading this week and expectations that the Fed will start tightening. [US/]

Three-year Treasury yields edged lower after a $50 billion auction.

“Central banks globally have all engaged in a hawkish pivot,” said BlueBay Asset Management’s David Riley. “As their tolerance for higher inflation persistently is less than previously signalled, we are shifting to a regime where there will be more macro volatility.”

Germany’s 10-year government bond yield, the benchmark of the bloc, rose 4.5 bps to touch its highest since January 2019 at 0.274%.

Italian government bond prices continued to underperform their peers, with the 10-year yield rising 7 bps to 1.880%.[GVD/EUR]

Graphic: Central…