Stocks Bounce After Paring Gains, Dollar Advances: Markets WrapBy
Treasuries decline; Brent jumps due to crack in pipeline
Inflation data gives the Fed ‘confidence to raise rates’
U.S. stocks fluctuated, while the dollar rose and Treasuries slipped as investors kept an eye on upcoming central bank meetings and the special Senate election in Alabama.
The S&P 500 Index climbed to another record, overcoming a dip sparked by Republican Senator Rand Paul tweeting his opposition to adding to the federal debt. The tech-heavy Nasdaq 100 Index and Nasdaq Composite Index both turned lower, as did the small-cap Russell 2000 Index. Telephone stocks, banks and diversified financial companies were up substantially, while utilities and semiconductors led decliners.
The dollar rose for a fourth straight day and 10-year Treasury yields hit 2.4 percent after data showed signs of inflation in producer prices as the Federal Reserve starts its two-day meeting. The Fed’s expected to raise rates after its meeting on Wednesday, and it’s anticipated that the European Central Bank will reveal details of plans to taper asset purchases on Thursday. The Bank of England and Swiss National Bank will also meet. Comments on the outlook for 2018 will be the focus for investors as they weigh the impact of coming policy normalization on global asset prices.
“PPI final demand prices are rising 3 percent, and this will give Fed officials that are cautious on the inflation outlook the confidence to raise rates this week,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in an email.
Alabama’s U.S. Senate race will conclude Tuesday evening, with polls showing Republican Roy Moore in the lead despite allegations that he initiated a sexual encounter with a 14-year-old girl when he was in his 30s. The winner probably won’t be certified until late December, after the expected vote on business-friendly tax cuts. Republicans hold 52 of the 100 seats in the chamber.
In Europe, stocks pushed to a five-week high amid a $5 billion deal in the tech sector. The euro weakened and most European bonds declined as German investor confidence slid in December for the first time in four months.
Brent crude jumped above $65 a barrel for the first time since June 2015 after one of the most important pipelines in the world was shut because of a crack, before turning lower. WTI crude slid below $58 a barrel after crossing the threshold on Monday. U.K. natural gas prices surged following a pipeline explosion in Austria that threatened to tighten flows. Gold rose slightly, while most industrial metals declined.
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Here are some of the key events scheduled for this week:
- Fed policy makers announce their decision on Wednesday.
- The ECB, Bank of England and Swiss National Bank set monetary policy at their respective meetings on Thursday.
- Among top U.S. economic reports are consumer inflation on Wednesday and retail sales on Thursday.
- European lawmakers continue to debate Brexit and weigh moves on the next step, while North America Free Trade Agreement negotiators meet again.
And these are the main moves in markets:
- The S&P 500 closed up 0.2 percent to reach a record 2,664.22.
- The Stoxx Europe 600 Index jumped 0.7 percent to the highest in almost five weeks.
- The U.K.’s FTSE 100 Index climbed 0.6 percent to the highest in more than a month.
- The MSCI Asia Pacific Index fell 0.3 percent.
- The MSCI Emerging Market Index dipped 0.7 percent.
- The Bloomberg Dollar Spot Index gained 0.2 percent to the highest in a month.
- The euro dropped 0.2 percent to $1.1745, the weakest in three weeks.
- The British pound declined 0.2 percent to $1.3319.
- The Japanese yen rose less than 0.1 percent to 113.52 per dollar.
- The yield on 10-year Treasuries rose one basis point to 2.3993 percent, the highest in more than a week.
- Germany’s 10-year yield rose two basis points to 0.314 percent, the highest in a week.
- Britain’s 10-year yield climbed two basis points to 1.223 percent.
- Japan’s 10-year yield dipped less than one basis point to 0.047 percent, the lowest in a week.
- West Texas Intermediate crude slid 1.3 percent to $57.25 a barrel.
- Gold added 0.2 percent to $1,244.89 an ounce.
- Copper rose 0.4 percent to $3.02 a pound.
— With assistance by Adam Haigh, Cormac Mullen, and Sarah Ponczek