markets

S&P 500 Hits Record as Inflation View Turns Iffy: Markets Wrap

Updated on
  • U.S. consumer price index unchanged in June following decline
  • June retail sales weak, fell for second month in a row

Geoff Lewis, senior Asia strategist at Manulife Asset Management, discusses the rally in equities and his outlook for the second half of the year. He speaks on 'Bloomberg Markets: Asia.' (Source: Bloomberg)

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U.S. stocks and bonds rallied Friday, with both the S&P 500 Index and Dow Jones Industrial Average reaching new highs, as U.S. inflation data came in short of Federal Reserve expectations, spotlighting the concerns of some central bankers about additional interest rate hikes.

Treasuries notched their first weekly gain in three, bolstered by Fed Chair Janet Yellen’s gradualist tone on policy tightening as inflation languishes below the central bank’s 2 percent target. Oil and gold advanced. A gauge of the dollar fell for the fifth straight day, its longest losing streak in two months.

The recent pace of inflation in the world’s largest economy has become even more pertinent since Yellen hinted in congressional testimony this week that sluggish price increases have structural causes. The soft June consumer price index number added to more than a quarter of shaky growth figures at a time when some Fed officials are hinging their support for further rate rises on the inflation outlook.

Retail sales also unexpectedly dropped in June for a second month of declines, signaling that consumers are providing only modest support for the U.S. economy and suggesting a weaker than hoped for rebound in the gross domestic product in the second quarter.

Major financial firms JPMorgan Chase & Co. and Citigroup Inc. reported earnings. JPMorgan, the biggest bank in the U.S., posted the highest annual profits ever for a U.S. bank over the past 12 months. And Citigroup topped earnings estimates, powered by strength in its investment banking group.

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Here are the main moves in markets:

Stocks

  • The S&P 500 rose 0.5 percent to an all-time high of 2,459.27.
  • The Dow Jones Industrial Average gained 0.4 percent to 21,637.74, also a record. The Nasdaq 100 increased 0.8 percent.
  • The Stoxx Europe 600 added 0.2 percent for a weekly advance of 1.8 percent.

Currencies and Bonds

  • The Bloomberg Dollar Spot Index declined 0.7 percent, close to its lowest level since September.
  • The pound added 1.3 percent to $1.3108, and the euro gained 0.6 percent to $1.1469.
  • Benchmark 10-year U.S. Treasury yields fell two basis point to 2.32 percent. Sovereign yields across Europe also declined, with the benchmark bund yield dropping less than one basis point and French peers two basis points lower.

Commodities

  • West Texas Intermediate crude rose 1.1 percent to $46.60 a barrel for a weekly advance of more than 5 percent.
  • Gold increased 0.9 percent to $1,228.61 an ounce.
  • Zinc snapped a three-week streak of gains after inventories available to investors on the London Metal Exchange surged by the most on record.

— With assistance by Martin Ritchie, and Namitha Jagadeesh

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