Author: Reuters

By David French

(Reuters) – The S&P 500 and Dow Jones Industrial Average eked out another closing record high on Friday, with all three Wall Street benchmarks scoring weekly gains, as artificial intelligence stocks had enough steam to keep the rally chugging along.

AI poster child Nvidia advanced again, rising 0.4%, and briefly traded above $2 trillion in market valuation for the first time.

Nvidia’s gains on Thursday, the session after its blowout earnings, had propelled the chipmaker to add $277 billion in stock market value, Wall Street’s largest ever daily gain. Despite a smaller advance on the final trading day of the week, its performance still dominated the market’s attention.

“Nvidia is one of the key companies, if not the key company, for driving the Nasdaq and S&P 500 higher,” said Anthony Saglimbene, chief market strategist at Ameriprise.

Saglimbene noted investors have been walking back expectations for Federal Reserve interest rate cuts, which otherwise could be a headwind for markets. But the performance of Nvidia and other Big Tech has pushed Fed worries into the background.

“The concentration is so intense right now on Big Tech, in particular on Nvidia, that it’s looking passed that,” he said.

Nvidia had pulled up other Big Tech and growth stocks in previous sessions, as investors traded the AI play. Some of these names gave up some gains on Friday, as Apple, Tesla and Meta Platforms all fell between 0.4% and 2.8%.

Shares of Super Micro Computer, another beneficiary of the AI rally, dropped 11.8% after the server component maker priced its convertible notes.

The S&P 500 gained 1.77 points, or 0.03%, to end at 5,088.8 points, while the Nasdaq Composite lost 44.80 points, or 0.28%, to 15,996.82. The Dow Jones Industrial Average rose 62.42 points, or 0.16%, to 39,131.53.

A majority of the S&P sectors ended in positive territory. Among the best performers were utilities, as well as materials and industrials. All three climbed between 0.5% and 0.7%.

For the week, the S&P 500 climbed 1.7%, the Dow rose 1.3% and the Nasdaq finished 1.4% higher. 

Carvana surged 32.1% on Friday after reporting its first-ever annual profit, helped by its pact with bondholders to cut its outstanding debt by $1 billion.

Among Friday’s decliners, Warner Bros Discovery shed 9.9% on reporting a bigger-than-expected quarterly loss, as the media conglomerate battled the fallout of the twin Hollywood strikes on content generation.

Jack Dorsey-led Block jumped 16.1% after the payments firm forecast adjusted core earnings for the current quarter above Wall Street estimates, betting on consumer resilience.

The volume on U.S. exchanges was 10.64 billion shares, compared with the 11.6 billion average over the last 20 trading days.

(This story has been refiled to fix a typo in the headline)

(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru and David French in New York; Editing by Shinjini Ganguli and David Gregorio)

By Herbert Lash

NEW YORK (Reuters) -A gauge of global equity markets lost steam on Friday but still set a new high amid optimism over Nvidia’s potent results, while Treasury yields fell as the market bet that the Federal Reserve will not cut interest rates until at least June.

Wall Street mostly extended gains as Nvidia briefly shot above $2 trillion in market value for the first time, driven by the AI frenzy that has gripped investors since the chipmaker’s blockbuster quarterly earnings report two days earlier.

Nvidia’s shares jumped 4.9% to a high of $823.94, before paring gains to close up 0.4%. Investors worry valuations may be stretched after a rally that has lifted the S&P 500 more than 7% so far this year, but are optimistic about the profits companies may gain from artificial intelligence.

“We don’t see that much more upside from current levels,” said Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management in New York.

“But we have to acknowledge that over the last year we have been consistently positively surprised by the enormous profit growth for some of the AI-leveraged companies,” Marcelli told Reuters, adding that better-than-expected inflation could prompt the Fed to cut more than expected.

Data that showed U.S. services sector growth picked up in January as new orders increased and employment rebounded to help equity markets advance, though a measure of input prices rising to an 11-month high added fodder to fears of sticky inflation.

MSCI’s all-country world index, a gauge of stock performance worldwide, closed up 0.1% after earlier hitting to a new intraday high.

The combination of strong growth and inflation not yet slowing to the Fed’s 2% target has led Fed officials to push back on rate cut expectations.

The strength of the labor market has unequivocally emboldened the Fed to be more relaxed about keeping rates high for longer,” said Dec Mullarkey, a managing director at SLC Management in Boston.

“So, the Fed is signaling it will be patient and use that runway to let more data roll in and cement the evidence that the economy is well balanced before they adjust rates,” Mullarkey said.

Fed funds futures show a 52.6% chance of a cut in June, with a 35.5% probability of no cut, a sharp reversal from bets on Feb. 1 of a 62% chance of a cut in March, according to CME Group’s FedWatch Tool.

The pan-European STOXX 600 index rose 0.43% to post its fifth straight week of gains and a new closing high. The French CAC40 and German DAX indices also closed at record highs.

On Wall Street, the Dow Jones Industrial Average rose 0.16% and the S&P 500 eked out a 0.03% gain as both posted new closing highs. The Nasdaq Composite dropped 0.28% but all three indices rose for the week, with the Dow up 1.3%, S&P 500 1.7% and the Nasdaq 1.4%.

The dollar was poised to record a weekly fall for the first time in 2024 as investors consolidated positions and sought further guidance on global economies. The dollar index rose 0.029%, with the euro down 0.03% to $1.082. On the data front in Europe, German business morale fell unexpectedly in Europe’s biggest economy in December, an Ifo institute survey showed.

German bond yields were on track for their third straight weekly increase as the economic data and central bank officials continued to chip away at investors’ hopes for rapid rate cuts by the European Central Bank this year.

Japan’s stock market was closed for a public holiday on Friday, but Nikkei futures rose nearly 1%, suggesting Japanese stocks will extend their record run next week.

Chinese shares wobbled between gains and losses. The Shanghai Composite index rose above the psychologically key 3,000-point mark. It is up 4.6% for the week and has bounced about 10% from five-year lows set more than two weeks ago.

Hong Kong’s Hang Seng index slipped 0.1%.

Data showed on Friday that China’s new home prices fell for the seventh month in January, leaving sentiment fragile as policymakers’ efforts to restore confidence in the debt-ridden sector struggled for traction.

A Reuters poll showed that the recent rally in global stocks had a little further to go but they were divided on whether there would be a correction in the next three months.

The two-year Treasury yield, which reflects interest rate expectations, fell 2.2 basis points to 4.692%, while the yield on the benchmark 10-year note was down 7.5 basis points at 4.252%.

The 10-year hit a three-month high of 4.3540% overnight.

U.S. crude futures settled down $2.12 to $76.49 a barrel and Brent fell $2.05 to settle at $81.62.

Gold prices were set for a weekly gain, buoyed by a softer dollar. U.S. gold futures settled 0.9% higher at $2,049.40 an ounce.

(Reporting by Herbert Lash, additional reporting by Huw Jones, Stella Qiu; editing by Shri Navaratnam, Neil Fullick, Jane Merriman, Will Dunham and Mark Heinrich and Marguerita Choy)

By David French

(Reuters) -The S&P 500 and Dow Jones Industrial Average clung on to end at another record high on Friday, with all three Wall Street indexes scoring weekly gains, as artificial intelligence stocks had enough steam to keep the rally chugging along.

AI poster child Nvidia advanced again and briefly traded above $2 trillion in market valuation for the first time.

Nvidia’s gains on Thursday, the session after its blowout earnings, had propelled AI chipmaker to add $277 billion in stock market value, Wall Street’s largest ever daily gain. Despite smaller gains on the final trading day of the week, its performance still dominated the market’s attention.

“Nvidia is one of the key companies, if not the key company, for driving the Nasdaq and S&P 500 higher,” said Anthony Saglimbene, chief market strategist at Ameriprise.

Saglimbene noted investors have been walking back expectations for Federal Reserve interest rate cuts, which otherwise could be a headwind for markets. But the performance of Nvidia and other Big Tech has pushed Fed worries into the background.

“The concentration is so intense right now on Big Tech, in particular on Nvidia, that’s it’s looking passed that,” he said.

Nvidia had pulled up other Big Tech and growth stocks in previous sessions, as investors traded the AI play. Some of these names gave up some gains on Friday, as Apple, Tesla and Meta Platforms all fell.

Shares of Super Micro Computer, another beneficiary of the AI rally, dropped after the server component maker priced its convertible notes.

According to preliminary data, the S&P 500 gained 2.28 points, or 0.04%, to end at 5,088.78 points, while the Nasdaq Composite lost 44.80 points, or 0.28%, to 15,996.82. The Dow Jones Industrial Average rose 60.58 points, or 0.16%, to 39,129.69.

A majority of the S&P sectors were in positive territory. Among the best performers were utilities, which had been the sole laggard the previous day, as well as materials and industrials.

Carvana surged on reporting its first-ever annual profit, helped by its pact with bondholders to cut its outstanding debt by $1 billion.

Warner Bros Discovery slipped on reporting a bigger-than-expected quarterly loss, as the media conglomerate battled the fallout of the twin Hollywood strikes on content generation.

Jack Dorsey-led Block jumped after the payments firm forecast adjusted core earnings for the current quarter above Wall Street estimates, betting on consumer resilience.

(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru and David French in New York; Editing by Shinjini Ganguli and David Gregorio)

WASHINGTON (Reuters) -The U.S. Federal Trade Commission said on Friday it had filed a complaint against H&R Block for deleting consumers’ tax data and requiring them to contact customer service when they downgrade to more affordable online products.

It also accused the tax preparation company of “deceptively marketing their products as ‘free’ when they were not free for many consumers.”

FTC said a number of TV ads and online promotions by H&R Block indicated that consumers could file for free while including language – sometimes in fine print – that those free offers only applied to simple returns.

The ads did not explain what a simple return was, and the company has changed the definition of the term “multiple times in recent years,” the commission said, while noting that H&R Block was aware of consumers’ frustration and confusion with the ads.

“H&R Block designed its online products to present an obstacle course of tedious challenges to consumers, pressuring them into overpaying for its products,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection.

H&R Block did not immediately respond to a request for comment.

(Reporting by Jasper Ward; Editing by Eric Beech)

By Karen Brettell

NEW YORK (Reuters) -The U.S. dollar index was on track for its first weekly fall in 2024 on Friday as investors took a breather from buying the currency following an almost two-month rally built on expectations that the Federal Reserve will begin cutting rates later than previously expected.

Investors have pushed back expectations for the first Fed rate cut to June, from May, and dramatically reduced how far they see the U.S. central bank cutting its benchmark rate. Fed officials have projected three 25 basis point cuts this year, while markets had priced for as many as seven.

“The dollar’s rally this year has been predicated on the markets converging back to the Fed,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

Traders may also be pricing for the likelihood that economic data will begin to slow.

“I think starting with the February jobs data, which is due March 8, we’re going to begin seeing a series of weaker U.S. economic data,” Chandler said.

Personal Consumption Expenditures (PCE) due next week may also provide clues for Fed policy.

New York Fed President John Williams sees the U.S. central bank on track for interest-rate cuts “later this year,” despite stronger-than-expected readings on inflation and the labor market in January, according to an interview published Friday by Axios.

The dollar index was little changed on the day on Friday at 103.93 and on track for a weekly loss of 0.34%. It has bounced from a five-month low of 100.61 on Dec. 28 and is holding below a three-month high of 104.97 reached on Feb. 14.

The greenback has risen this year on enduring economic strength and as Fed officials caution against cutting rates too soon as they seek to bring inflation back closer to their 2% annual target.

Now, however, investors are waiting on further economic indicators for fresh clues on monetary policy.

“It’s not the time yet to sell the dollar, but we think it will start to weaken in the second quarter, assuming that the Fed will cut in June and continue cutting rates once a quarter,” said Athanasios Vamvakidis, global head of G10 forex strategy at BofA Global Research.

BofA expects the euro to strengthen to 1.15 versus the greenback by the end of the year.

“If the U.S. economy remains so strong, we have to change our view, as the Fed might not be able to cut in June or not even this year,” Vamvakidis added.

Improved risk appetite that has seen stock markets set records in several countries this week may have also reduced demand for the U.S. currency, which is seen as a safe haven.

The euro was little changed on the day at $1.0822. It has dropped from $1.11395 on Dec. 28, but is up from $1.0695 on Feb. 14.

German business morale improved in February, a survey showed on Friday, though probably not enough to prevent Europe’s biggest economy from slipping into another recession.

ECB President Christine Lagarde on Friday called the relatively benign fourth quarter wage growth data encouraging but not yet enough to give the European Central Bank confidence that inflation has been defeated.

YEN WORST PERFORMER

The yen is the worst-performing G10 currency this year, with the greenback gaining 6.7% against the Japanese currency. The dollar fell 0.04% to 150.45 yen on Friday.

The Japanese currency is headed for a fourth weekly drop as investors chased better yields just about everywhere else, wagering Japan’s rates would stay near zero for some time.

With the Fed expected to hold rates higher for longer, investors are staying in carry trades in which they sell or borrow the yen and invest in higher yielding currencies.

“For the dollar/yen to weaken, we need the Fed to start cutting rates,” said BofA’s Vamvakidis.

In cryptocurrencies, bitcoin fell 1.01% to $51,122.

(Reporting by Karen BrettellAdditional reporting by Stefano RebaudoEditing by Mark Potter and Will Dunham)

By Herbert Lash and Huw Jones

NEW YORK/LONDON (Reuters) -A gauge of global equity markets lost steam on Friday after setting a new intraday high as optimism over Nvidia’s results faded while the dollar index was steady as Federal Reserve officials indicated rate cuts will come later than expected.

Wall Street’s main indexes earlier extended gains as Nvidia shot above $2 trillion in market value for the first time, driven by the AI frenzy that has gripped markets since the chipmaker’s blockbuster quarterly report two days earlier.

Nvidia later traded little changed, last up about 1%.

Equity markets also advanced after data showed U.S. services sector growth picked up in January as new orders increased and employment rebounded, though a measure of input prices rising to an 11-month high.

MSCI’s all-country world index, a gauge of stock performance worldwide, was up 0.14% after earlier shooting to a new high.

The combination of strong growth and inflation not yet slowing to the Fed’s 2% target has led Fed officials to push back on rate cut expectations.

Fed funds futures show a 52.3% chance of a cut in June, with a 34.7% probability of no cut, a sharp reversal from bets on Feb. 1 of a 62% chance of a cut in March, according to CME Group’s FedWatch Tool.

“When you look at the speeches that we’ve gotten over the last two days here from the Fed, they want to be very clear that they have inflation down to their goal,” said Stan Shipley, fixed-income strategist at Evercore ISI in New York.

“Since the economy is so strong, they see no reason why should they cut rates until they are sure,” he said.

The pan-European STOXX 600 index rose 0.37%, on track for its fifth straight week of gains and a new closing high.

On Wall Street, the Dow Jones Industrial Average rose 0.32% and the S&P 500 gained 0.09%, but the Nasdaq Composite dropped 0.19%.

The dollar was poised to record a weekly fall for the first time in 2024 on Friday as investors consolidated positions and sought further guidance on global economies.

The dollar index was flat, with the euro unchanged at $1.0823.

On the data front in Europe, German business morale fell unexpectedly in Europe’s biggest economy in December, an Ifo institute survey showed.

German bond yields were on track for their third straight weekly increase on Friday as the economic data and central bank officials continued to chip away at investors’ hopes for rapid interest rate cuts by the European Central Bank this year.

Japan’s stock market was closed for a public holiday on Friday, but Nikkei futures rose nearly 1%, suggesting Japanese stocks will extend their record run next week.

Chinese shares wobbled between gains and losses. The Shanghai Composite index rose above the psychologically key 3,000-point mark. It is up 4.6% for the week and has bounced about 10% from five-year lows set more than two weeks ago.

Hong Kong’s Hang Seng index slipped 0.1%.

Data showed on Friday that China’s new home prices fell for the seventh month in January, leaving sentiment fragile as policymakers’ efforts to restore confidence in the debt-ridden sector struggled for traction.

A Reuters poll showed that the recent rally in global stocks had a little further to go but they were divided on whether there would be a correction in the next three months.

The two-year Treasury yield, which reflects interest rate expectations, fell 2.2 basis points to 4.692%, while the yield on the benchmark 10-year note was down 6.5 basis points at 4.262%.

The 10-year hit a three-month high of 4.3540% overnight.

U.S. crude fell 1.68% to $77.29 per barrel and Brent was at $82.35, down 1.58% on the day.

(Reporting by Stella Qiu; editing by Shri Navaratnam, Neil Fullick, Jane Merriman and Mark Heinrich and Marguerita Choy)

By Chris Prentice, Isla Binnie, Jarrett Renshaw and Douglas Gillison

(Reuters) -The U.S. Securities and Exchange Commission (SEC) has removed some of its most ambitious greenhouse gas emission disclosure requirements from corporate climate risk rules it is preparing to adopt, people familiar with the matter said on Thursday.

The SEC has dropped a requirement for U.S.-listed companies to disclose so-called Scope 3 emissions, which was included in its original draft of the rules published in March 2022, the sources said.

Scaling back these rules would be a blow for President Joe Biden’s agenda to address climate change threats through federal agencies. Biden, a Democrat, has been under pressure from many lawmakers in his party to do more and move at a faster pace.

Scope 3 emissions account for greenhouse gases, such as carbon dioxide, released in the atmosphere from a company’s supply chain and the consumption of its products by customers. For most businesses, Scope 3 emissions represent more than 70% of their carbon footprint, according to consulting firm Deloitte.

If adopted, the new draft would represent a win for many corporations and their trade groups that lobbied to water down the rules. But it would also deviate from European Union rules which make Scope 3 disclosures mandatory for large companies starting this year and potentially complicate compliance for some global corporations.

The SEC’s original draft proposed mandatory disclosure of emissions for which companies are more directly responsible, dubbed Scope 1 and Scope 2. Some lobbyists pushed the SEC to require such disclosures only if they are material to a company’s business. Reuters could not ascertain whether the latest draft changed the Scope 1 and 2 requirement threshold.

Once the SEC settles on a final draft, it must be put to a vote among its five commissioners. The timing of the vote is not clear, and it is possible that the draft is revised before then.

The sources requested anonymity because the matter is confidential. An SEC spokesperson said the agency considered adjustments to its draft rules based on public feedback, but declined to comment on the contents of the latest draft of the climate risk rules.

“The Commission moves to adopt rules only when the staff and the Commission think they are ready to be considered,” the SEC spokesperson said.

The SEC’s March 2022 proposal would require publicly listed companies to disclose a range of climate-related risks that could affect their business. It argued that greenhouse gas emission disclosures are important for investors’ due diligence. Companies have pushed back, arguing the data is hard to produce and legally contentious.

Reuters reported in November that the SEC told lobbyists and corporate executives it was considering watering down the rules.

Some SEC officials worry that mandating disclosures across the board could make the rule more vulnerable to legal challenges which, if successful, could tie the agency’s hands when writing other rules, Reuters reported at the time.

Those concerns were fueled by a U.S. Supreme Court decision in 2022 curbing the Environmental Protection Agency’s power to regulate greenhouse gas emissions. This raised doubts over whether SEC rules would survive a court challenge.

Some corporate groups and Republican lawmakers also argued that tackling climate change-related issues exceeds the SEC’s authority, and that the rules would be unduly burdensome for companies and cloud truly material information for investors.

LITIGATION RISK

SEC Chair Gary Gensler told an event held by the U.S. Chamber of Commerce in October that he hoped the emissions disclosure rules, which received some 16,000 public comments, will survive any legal challenges once they are finalized and adopted.

“I would expect that whatever the rule says, unless they really water it down tremendously, there will be litigation,” Columbia Law School Professor John Coffee, a securities regulations expert, said in an interview.

Last year, California adopted a law that will require companies active in the state to disclose Scope 3 emissions as early as 2027. Corporate lobbyists said companies would still be reluctant to disclose Scope 3 emissions in SEC filings, even if they produced them for California, because including such information in securities filings gives grounds for more lawsuits from investors.

Some voluntary initiatives such as the International Sustainability Standards Board already specify that it is best practice to disclose Scope 3 emissions.

“There is no question Scope 3 reporting is important, because otherwise you risk presenting a somewhat misleading picture of the company’s greenhouse gas emissions,” said Ben Schiffrin, director of securities policy at Washington, D.C-based consumer and investor advocacy group Better Markets.

(Reporting by Chris Prentice and Isla Binnie in New York and Jarrett Renshaw and Douglas Gillison in Washington, D.C.Additional reporting by Ross Kerber in BostonEditing by Michelle Price, Greg Roumeliotis and Aurora Ellis)

By Alden Bentley and Davide Barbuscia

(Reuters) – The spreads between both investment-grade and junk-rated corporate bond yields and U.S. Treasuries have fallen to their narrowest level in more than two years, in a sign of overall investor confidence growing.

The spread on the ICE BofA U.S. Corporate Index, a commonly used benchmark for high-grade debt, declined to 93 basis points on Thursday, its lowest since November 2021.

On the ICE BofA U.S. High Yield Index, a commonly used benchmark for junk bonds, the option adjusted spread dipped to 322 basis points, its lowest since January 2022.

These spreads reflect how much extra yield investors demand to hold corporate bonds over Treasury notes and bonds, which are considered the safest financial instruments because there is a near-zero chance of default by the U.S. government.

“The additional premium you get over risk-free securities is very slim,” said Anthony Woodside, head of U.S. fixed income strategy at LGIMA. But, he added, “investors are looking at all-in yields.”

Spreads are seen as gauge of market confidence. Strong demand for junk bonds in particular is seen as an optimistic signal, with narrowing spreads indicating investors see financial conditions as healthy and are less worried about corporate default.

The junk spread surged to over 1,000 bp in March 2020 as the onset of the COVID-19 pandemic fanned market panic.

The High Yield Index itself is near a record high set early this month. Meanwhile, the ICE BofA U.S. Investment Grade corporate bond index fell to a two-month low last week.

Market optimism has been driven by a record-breaking Wall Street rally and a surprisingly resilient economy which have lifted Treasury yields this year.

In the week to Wednesday, as the S&P 500 hit record highs, investors put $15.2 billion into bonds, including $10.2 billion into investment-grade bond funds, which logged a 16th straight week of inflows, the longest such stretch since October 2021, Bank of America Global Research said on Friday.

(Reporting by Alden Bentley and Davide Barbuscia, Editing by William Maclean and Alexander Smith)

By Aditya Soni and Patturaja Murugaboopathy

(Reuters) -Nvidia briefly hit $2 trillion in market value for the first time on Friday, riding on an insatiable demand for its chips that made the Silicon Valley firm the pioneer of the generative artificial intelligence boom.

The milestone followed another bumper revenue forecast from the chip designer that drove up its market value by $277 billion on Thursday – Wall Street’s largest one-day gain on record.

Its rapid ascent in the past year has led analysts to draw parallels to the picks and shovels providers during the gold rush of 1800s as Nvidia’s chips are used by almost all generative AI players from chatGPT-maker OpenAI to Google.

That has helped the company vault from $1 trillion to $2 trillion market value in around eight months – the fastest among U.S. companies and in less than half the time it took tech giants Apple and Microsoft.

“For AI companies today – the leaders of the sector – what’s going to be binding for them is not going to be demand. It’s just going to be their capacity to answer the surging demand,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Nvidia’s shares were last trading 0.6% lower, giving it a market value of about $1.95 trillion. They had risen as much as 4.9% to a record high of $823.9 earlier in the session, after a more than 16% jump on Thursday.

The shares have surged nearly 60% this year, after more than tripling in value in 2023. The chip designer’s 2024 share surge has been crucial to the S&P 500’s gains, contributing to more than a quarter of the stock index’s rise this year.

Its latest market-beating forecast of a whopping 233% growth in first-quarter revenue helped global markets notch record highs on Thursday.

The breakneck growth has drawn analysts and investors from far and wide to Nvidia.

“I’m a European fund manager, but I must have had more emails about their results than I’ve had about any other set. There have been calls, every broker doing 10-minute debriefs, it’s been mind boggling,” said one investor, who declined to be named.

Despite the share surge, Nvidia’s valuation has fallen due to rapid increases in analysts’ estimates. It has a 12-month forward price-to-earnings ratio of about 31, down from 49 times a year ago, according to LSEG data.

“Leading cloud computing companies plan to boost their capital expenditure to satisfy demand for AI training and inference, and it appears that virtually all this spending will fall into Nvidia’s pockets,” said Brian Colello, a strategist at Morningstar.

“We anticipate revenue will rise by a couple of billion each quarter throughout fiscal 2025 for Nvidia as more chip supply comes online.”

(Reporting By Aditya Soni, Amruta Khandekar, Patturaja Murugaboopathy and Gaurav Dogra in Bengaluru and Alun John in London; Editing by Barbara Lewis and Arun Koyyur)

By Karen Brettell

NEW YORK (Reuters) – The U.S. dollar index was on track for its first weekly fall in 2024 on Friday as investors took a breather from buying the currency following an almost two-month rally built on expectations the Federal Reserve will begin cutting rates later than previously expected.

Investors have pushed back expectations for the first Fed rate cut to June, from May, and dramatically reduced how far they see the U.S. central bank cutting its benchmark rate. Fed officials have projected three 25 basis point cuts this year, while markets had priced for as many as seven.

“The dollar’s rally this year has been predicated on the markets converging back to the Fed,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

Traders may also be pricing for the likelihood that economic data will begin to slow. “I think starting with the February jobs data, which is due March 8, we’re going to begin seeing a series of weaker U.S. economic data,” Chandler said.

Personal Consumption Expenditures (PCE) due next week may also provide clues for Fed policy.

The dollar index dipped 0.06% on Friday to 103.86. It has bounced from a five-month low of 100.61 on Dec. 28 and is holding below a three-month high of 104.97 reached on Feb. 14.

The greenback has bounced this year on enduring economic strength and as Fed officials caution against cutting rates too soon as they seek to bring inflation back closer to their 2% annual target.

Now, however, investors are waiting on further economic indicators for further clues on monetary policy.

“It’s not the time yet to sell the dollar, but we think it will start to weaken in the second quarter, assuming that the Fed will cut in June and continue cutting rates once a quarter,” said Athanasios Vamvakidis, global head of G10 forex strategy at BofA Global Research.

BofA expects the euro to strengthen to 1.15 versus the greenback by the end of the year.

“If the U.S. economy remains so strong, we have to change our view, as the Fed might not be able to cut in June or not even this year,” he added.

Improved risk appetite that has seen stock markets set records in several countries this week may have also reduced demand for the U.S. currency, which is seen as a safe-haven.

The euro was little changed on the day at $1.0823. It has dropped from $1.11395 on Dec. 28, but is up from $1.0695 on Feb. 14.

German business morale improved in February, a survey showed on Friday, though probably not enough to prevent Europe’s biggest economy from slipping into another recession.

YEN WORST PERFORMER

The yen is the worst-performing G10 currency this year, with the greenback gaining 6.6% against the Japanese currency. The dollar fell 0.11% to 150.34 yen on Friday.

The Japanese currency is headed for a fourth weekly drop as investors chased better yields just about everywhere else, wagering Japan’s rates would stay near zero for some time.

With the Fed expected to hold rates higher for longer, investors are staying in carry trades in which they sell or borrow the yen and invest in higher yielding currencies.

“For the dollar/yen to weaken, we need the Fed to start cutting rates,” said BofA’s Vamvakidis.

In cryptocurrencies, bitcoin fell 1.14% to $51,050.

(Reporting by Karen Brettell; Additional reporting by Stefano Rebaudo; Editing by Mark Potter)