Stocks, Greenback Gain as Tax Reform Passes Hurdle: Markets WrapBy
Shares dipped after North Korea fired ballistic missile
Treasuries steady following soft seven-year note auction
U.S. stocks rose to records as corporate tax cuts inched closer to reality after passing another hurdle in the Senate. The dollar extended gains and Treasuries traded little changed.
The S&P 500 Index gained the most in more than two months as the Senate budget committee advanced the Republican tax bill. Lenders saw the largest rally since March after Federal Reserve chair nominee Jerome Powell signaled a lighter touch on financial regulations. Shrugging off a ballistic missile launch by North Korea, 10-year Treasury yields fluctuated near 2.33 percent and the dollar rose for a second day.
In commodities, copper slid the most in two weeks, while West Texas crude traded below $58 a barrel after touching the highest level in more than two years before OPEC and its allies meet this week.
Meanwhile, the Senate tax bill is headed for a marathon debate this week after the budget committee voted Tuesday along party lines to send the Republican plan to the floor. Republican holdouts, Bob Corker of Tennessee and Ron Johnson of Wisconsin, dropped their objections shortly before the vote.
“This week is about Senate republicans and the ability to get the wavering republican senators on board,” said Quincy Krosby, chief market strategist at Prudential Financial.
Earlier, Powell faced his Senate confirmation hearing in Washington, saying during testimony the case for a December rate hike “is coming together.” In a statement ahead of the meeting, the current member of the board of governors signaled broad support for how the Fed operates, regulates and guides the economy.
Elsewhere, sterling pared losses after a report said the U.K. and European Union reached an agreement-in-principle on settlement ahead of a meeting next week.
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Here are some key events coming up this week:
- The U.S. Senate as soon as this week could debate and vote on tax-cut legislation.
- President Trump will meet with Democratic and Republican congressional leaders Tuesday to discuss a federal spending plan to prevent a partial shutdown and keep the government open after current funding expires Dec. 8.
- In China, the official and Caixin manufacturing PMIs are expected to show mostly steady momentum.
- Japan industrial production is forecast to have rebounded in October, but CPI may show a sharp divergence between headline and core inflation, Bloomberg Intelligence said.
- The second print of third-quarter U.S. GDP on Wednesday may be revised up thanks to consumer spending and inventory accumulation, Bloomberg Intelligence said. The core PCE deflator, the Fed’s preferred gauge of inflation, is due Thursday.
- OPEC meets in Vienna on Thursday.
These are the main moves in markets:
- The S&P 500 Index rose 1 percent to 2,627.04 as of 4 p.m. New York time.
- The Down Jones Industrial Average rose 257 points to 23,837, the biggest gain since Sept. 11.
- The Stoxx Europe 600 Index gained 0.6 percent, the biggest advance in a week.
- The MSCI Emerging Market Index climbed 0.2 percent.
- The Bloomberg Dollar Spot Index rose 0.2 percent.
- The euro fell 0.5 percent to $1.1845, the biggest drop in a week.
- The British pound rose 0.4 percent to $1.3365.
- The Japanese yen decreased 0.4 percent to 111.48 per dollar.
- The yield on 10-year Treasuries was little changed at 2.33 percent.
- Germany’s 10-year yield fell less than one basis point to 0.34 percent.
- Britain’s 10-year yield was little changed at 1.253 percent.
- Japan’s 10-year yield declined less than one basis point to 0.04 percent.
- West Texas Intermediate crude fell 0.3 percent to $57.91 a barrel.
- Gold dropped 0.1 percent to $1,293.09 an ounce.
- Copper declined 1.9 percent to $3.09 a pound, the lowest in more than a week.
— With assistance by Cormac Mullen, and Sarah Ponczek