Lower rates tend to help high-growth and technology stocks in particular, and they were some of the market's leaders Monday.
Analysts, though, warn more bumpiness is almost surely on the way for the stock market. Even if inflation is slowing, the Fed has pledged to hike rates still further and then to hold them at a high level for a while to make sure the job is done on inflation. "With 2022 behind us, investors are now primarily focused on the profit outlook for the coming year," strategists at Goldman Sachs wrote in a report.
More stocks rose than fell, and Wall Street's largely positive start to 2023 has come on hopes the Federal Reserve could ease up on its economy-shaking hikes to interest rates as inflation cools. Such rate increases have already slowed parts of the economy sharply, and the fear is more big hikes could cause a painful recession.
The yield on the two-year Treasury, which tends to track expectations for Fed action, fell to 4.19% from 4.26% late Friday and more than 4.70% in November. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, fell to 3.52% from 3.57% late Friday.