The dollar rallied, recouping losses spurred by last week’s jobs report, while shorter-term Treasuries fell. U.S. stocks erased gains in the final 30 minutes of trading before the Federal Reserve releases a record of its last meeting.
The Bloomberg Dollar Spot Index jumped 0.6 percent by 5 p.m. in New York, bringing its two-day gain to 0.9 percent. Yields on three-year Treasury notes rose two basis points to 0.83 percent. The Standard & Poor’s 500 Index lost 0.2 percent, reversing a gain of at least 0.4 percent and halting a two-day advance. The Stoxx Europe 600 Index climbed 1.6 percent. U.S. oil rallied to the highest level this year, and gold slipped.
While equities have advanced since data indicating weaker U.S. jobs growth bolstered the case for maintaining low rates, the dollar has rebounded and Treasury rates have climbed on expectations the Federal Reserve will still raise key borrowing costs this year. The central bank is scheduled to release minutes of its March meeting on Wednesday as earnings season gets under way in the U.S. with Alcoa Inc. reporting results.
“The market is inclined to give the jobs market a pass, given its outperformance over the better part of the last year,” Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co., said by phone. “The dollar has entered more of a consolidation phase and I think it’s really searching for that next catalyst.”
The dollar climbed 1 percent to $1.0812 per euro Tuesday and gained 0.6 percent to 120.26 yen. The greenback appreciated against 15 of 16 major currencies tracked by Bloomberg, with the exception of Australia’s dollar, which added 0.6 percent after the central bank kept interest rates unchanged amid market expectations of a cut.
Yields on benchmark 10-year Treasury notes slipped one basis point, or 0.01 percentage point, to 1.88 percent after after jumping six basis points on Monday. Treasuries due in seven years and less remained lower after the U.S. sold $24 billion in three-year notes at the lowest auction yield in more than a year.
The S&P 500 advanced 0.7 percent on Monday after comments from William Dudley, the head of the New York Fed, drew attention to the implications of Friday’s jobs report on interest-rate policy. Later on Monday, Atlanta Fed President Dennis Lockhart said that while recent economic weakness probably won’t persist, he favors pushing out the central bank’s first rate increase past the next two meetings.
Minutes from the Fed’s most recent meeting may provide more clarity on their thinking, after officials removed a commitment to being “patient” on rate increases.
Among stocks moving Tuesday, FedEx Corp. advanced 2.7 percent after agreeing to buy TNT Express NV for $4.8 billion. Axalta Coating Systems Ltd. gained 9.8 percent after Berkshire Hathaway Inc. agreed to buy 20 million of its shares from affiliates of the Carlyle Group LP for $560 million.
“The market’s kind of treading water here it seems like, waiting for earnings season,” Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc., said by phone. “That the market is holding up relatively well despite the fact that we have a lot of skepticism could be actually a bullish scenario for the market.”
Alcoa unofficially kicks off the earnings season on Wednesday. Analysts predict profits for S&P 500 companies retreated 5.8 percent in the first quarter as earnings were buffeted by tumbling oil prices and the stronger dollar. The Bloomberg dollar gauge, which tracks the greenback versus 10 major peers, climbed 6.2 percent in the first three months.
More than 10 shares advanced for each that declined in Europe’s Stoxx 600, with energy producers leading gains among 19 industry groups. The index closed at its highest level since March 2000.
Most emerging-market stocks climbed, as materials producers advanced and speculation grew that China will do more to support economic growth. The Shanghai Composite Index surged 2.5 percent to its highest close since March 2008. Mainland Chinese and Hong Kong markets were closed on Monday, with the latter set to resume trading Wednesday.
The People’s Bank of China reiterated that it will work to keep an “appropriate balance between loosening and tightening,” according to a statement on its website, citing a committee meeting on first-quarter monetary policy. The central bank has cut interest rates twice since November and lowered lenders’ reserve-requirement ratios once.
Australia’s dollar jumped just before the Reserve Bank of Australia announcement, rebounding after weakening 0.5 percent Monday. Of the 30 economists polled by Bloomberg News, 17 predicted the RBA would keep the country’s overnight cash rate steady, while the rest forecast a reduction of 25 basis points.
West Texas Intermediate crude rebounded amid speculation that a drop in U.S. oil drilling activity will curb production. Futures rose 3.5 percent to $53.98 a barrel in New York, the highest settlement since Dec. 30.
U.S. crude output slipped from a record in the week ended March 27, according to the Energy Information Administration. The EIA releases stockpiles data on Wednesday. WTI crude soared 6.1 percent Monday, its biggest one-day gain since Feb. 3. Brent added 1.7 percent to $59.10 a barrel Tuesday.
Gold retreated from the highest level in almost seven weeks as the dollar strengthened, reducing demand for the metal as an alternative investment. Futures for June delivery fell 0.7 percent to settle at $1,210.60 an ounce in New York. The price reached $1,224.50 on Monday, the highest level since Feb. 17.