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Global equities index rises on rate outlook

written by Bella Palmer

The next key data investors are looking to is Thursday's release of January's U.S. PCE index

A global equities index gained marginally on Tuesday as investors weighed the outlook for central bank rate cuts after the latest batch of economic data and ahead of a key U.S. inflation data due Thursday, while the dollar dropped against the yen.

Oil prices increased after reports that producer group OPEC+ was considering extending voluntary oil output cuts into the second quarter to provide additional support.

Earlier during the day, the Conference Board said U.S. consumer confidence retreated in February after three consecutive monthly increases as households worried about the labour market and the domestic political environment. Its consumer confidence index slid to 106.7 this month versus economist expectations of 115.0 and a downwardly revised 110.9 for January.

Also, orders for long-lasting U.S. manufactured goods dropped by the most in almost four years in January amid a sharp decline in bookings for commercial aircraft, while the outlook for business investment on equipment was mixed.

The next key data investors are looking to is Thursday's release of January's U.S. PCE index, which is the Fed's preferred inflation measure.

We have a bit of a defensive tone in the market today with the utilities sector leading gains, said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

Investors are looking ahead to Thursday's inflation data. If it remains sticky it will impact how soon and how many times the Federal Reserve will reduce rates, and because of this "markets are relatively flat because investors are in wait-and-see mode," he added.

Currently, nearly 63% of traders expect the Federal Reserve to start reducing rates by June, down from around 98% at the end of January, showed the CME Group's FedWatch tool.

In equities, the Dow Jones Industrial Average dropped 96.82 points, or 0.25%, to 38,972.41, the S&P 500 added 8.65 points, or 0.17%, to 5,078.18 and the Nasdaq Composite advanced 59.05 points, or 0.37%, to 16,035.30.


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