U.S. stocks hold gains as traders ratchet up rate bets

Stocks nudged higher Thursday as investors assessed the corporate profit outlook, while wagers on further Federal Reserve interest-rate hikes lifted Treasury yields.

Early gains in the Stoxx Europe 600 Index were led by retailers, leisure and technology firms, alongside an advance in shares of Chinese tech companies. US futures were little changed.

Equities are proving resilient to heightened bond market anxiety and an inverted Treasury yield curve flashing warnings on economic risks, as the S&P 500 climbs back toward the highest level in two months. But a global wave of monetary tightening risks upending those gains.

“There’s an intense tug-of-war happening in the economy and markets,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “On one side, you have a narrative that reasonable growth is going to support continued inflation pressure and keep the Fed hiking. The other narrative is that slowing growth is going to ease inflation and allow the Fed to stop hiking.”