Another round of robust U.S. data is set to arrive next week, raising questions in the financial market about whether the economy can continue to avoid buckling under the weight of the highest interest rates in over two decades.<\/p>\n
The first revision to fourth-quarter gross domestic product is set to be released next Wednesday, followed the next day by January\u2019s reading on the Federal Reserve\u2019s preferred inflation gauge, the personal consumption expenditures, or PCE, price index. <\/p>\n
JPMorgan Chase & Co. \u201cWhat we are all trying to do is figure out how long the economy can remain this strong with interest rates this high,\u201d said Tom Graff, chief investment officer at Baltimore-based Facet, which manages $2.7 billion in assets.<\/p>\n \u201cThe Fed could say this is the new norm for where interest rates should be,\u201d he said via phone, referring to the current target for the fed-funds rate of 5.25% to 5.5%. \u201cFor stocks, that means all the burden is on earnings, which have carried all the water this year. For bonds, it probably means there\u2019s some upside risk to longer-term yields.\u2019\u2019<\/p>\n On Thursday, a pair of\u00a0S&P Global<\/a>\u00a0surveys revealed that the economy expanded at an above-average rate this month. That data, along with weekly\u00a0initial jobless-benefit claims<\/a>\u00a0that fell to a five-week low of 201,000 in mid-February, helped keep the 10-year Treasury yield The month of February has already brought a string of solid U.S. data, such as January\u2019s surprising nonfarm-payroll gain<\/a> of 353,000 and hotter-than-expected consumer-price index<\/a> report.<\/p>\n \u201cGood economic growth is good for everybody,\u201d Graff said on Thursday. \u201cI\u2019m still bullish on stocks as long as earnings remain strong. If inflation has a meaningful rebound to the 3% or 4% range, that would worry everybody. But if we are bouncing around 2.5% at the end of the year and it comes with good economic growth, stocks will perform well.\u2019\u2019<\/p>\n<\/div>\n
\n JPM,
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\n has raised its tracking estimate for GDP during the final three months of 2023 to 3.3%, unchanged from the government\u2019s initial estimate<\/a> released last month, according to economist Daniel Silver. Meanwhile, a team at Morgan Stanley
\n MS,
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\n expects January\u2019s core PCE, which excludes food and energy, to come in around 0.4% on a monthly basis, versus December\u2019s 0.2% reading<\/a>, and inflation to remain on a \u201cbumpy path\u201d toward a 2.3% year-over-year core rate for 2024. <\/p>\n
\n BX:TMUBMUSD10Y<\/a>
\n near its highest level in almost three months. The Nasdaq Composite
\n COMP<\/a>
\n was also approaching<\/a> its first record close in more than two years on investors\u2019 enthusiasm over the technology sector, and was up by 2.9% in afternoon trading. <\/p>\n