Technology companies led gains in stocks, with bond traders paring aggressive bets on Federal Reserve hikes amid speculation that inflation may be near a peak. Investors also weighed the start of the earnings season against geopolitical risks.

The S&P 500 halted a three-day drop, while the tech-heavy Nasdaq 100 outperformed. Another decline in Treasury two-year yields -- which are more sensitive to imminent monetary-policy decisions -- took this week’s slide to about 15 basis points. The loonie rose after the Bank of Canada raised its interest rate by half a percentage point in its biggest increase in more than two decades. Oil traded above US$100 a barrel.

Bond yields fell even after data showing prices paid to U.S. producers jumped the most on record, topping all estimates. That stands in contrast with the latest consumer-price report, which showed a softening in the pace of core inflation. For analysts, the big moves across the front-end of the Treasury market reflect easing bets on how far the Fed will tighten policy in the current business cycle.

“U.S. stocks are rebounding as the bond-market selloff appears to be over for now,” said Ed Moya, senior market analyst at Oanda. “Fed rate hike expectations will get tested in the coming months, and many traders are concerned that geopolitical and inflation risks will force them to be less aggressive with monetary tightening later this year.”

Earnings highlights:

JPMorgan Chase & Co.’s first-quarter results were marred by a US$524 million loss tied to market fallout from Russia’s invasion of Ukraine.
Investors continued to pour money into BlackRock Inc.’s funds in the first quarter, seemingly undeterred by falling stock prices, surging inflation and war in Europe.
Delta Air Lines Inc. said a strong rebound in summer travel bookings will help the carrier overcome rising fuel costs and a slow return of business travel.
Retailer Bed Bath & Beyond Inc. blamed global supply-chain headwinds for an unexpected loss and bigger-than-expected sales decline.

Earnings season “has the potential to be a mess,” said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, citing “myriad headwinds” faced by companies. But she also sees the possibility for it to “not be as bad as feared, given the likelihood that buy-side expectations are much lower than official sell-side forecasts -- as long as robust assessments of underlying appetite/demand remain in place.”

“We’ve finally kicked off earnings and we’re getting a little bit of a sense of what we want to focus on,” said Shawn Cruz, director of derivative strategy at TD Ameritrade. “It’s really going to be how inflation -- no matter what the cause, if it’s supply-chain issues from China, or if it’s commodity-related issues that seem to be happening everywhere -- how that’s affecting business.”

Traders also monitored the latest geopolitical developments, with President Joe Biden saying the U.S. will expand the size and scope of weapons it’s providing to Ukraine in a new US$800 million package of military assistance. That includes heavy artillery systems and armored personnel carriers -- signaling a more intense commitment than the nation has made already -- along with artillery rounds and additional helicopters.

Events to watch this week:

• ECB rate decision, Thursday
• Bank of Korea policy decision, Thursday
• U.S. retail sales, initial jobless claims, business inventories, University of Michigan consumer sentiment, Thursday
• Cleveland Fed President Loretta Mester, Philadelphia Fed President Patrick Harker due to speak Thursday
• U.S. stock and bond markets are among those closed for Good Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1.1 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 2 per cent
• The Dow Jones Industrial Average rose 1 per cent
• The MSCI World index rose 0.9 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.3 per cent
• The euro rose 0.5 per cent to US$1.0883
• The British pound rose 0.8 per cent to US$1.3110
• The Japanese yen fell 0.2 per cent to 125.66 per dollar

Bonds

• The yield on 10-year Treasuries declined two basis points to 2.70 per cent
• Germany’s 10-year yield declined two basis points to 0.77 per cent
• Britain’s 10-year yield was little changed at 1.80 per cent

Commodities

• West Texas Intermediate crude rose 3.6 per cent to US$104.26 a barrel
• Gold futures rose 0.3 per cent to US$1,981.10 an ounce