markets

U.S. Stocks End Mixed as Bonds Gain, Dollar Slumps: Markets Wrap

Updated on
  • S&P 500 halts 2-day slide after erasing gain of 1 percent
  • Treasuries advance after Wednesday’s drop; crude rises
Credit Suisse's Porter Expects Weak Dollar Will Start to Be Resolved

U.S. stocks eked out a gain to halt a two-day slide, but not before erasing an advance that topped 1 percent as investors grappled with the threat from higher interest rates. Treasuries edged higher and the dollar slumped.

The S&P 500 Index barely held above 2,700 after dipping below that round number in the final 15 minutes of trading. It’s faded from session highs in afternoon trading for a fourth straight day. ended in the green after briefly turning lower in last trading as the index coughed up its biggest advances for a fourth straight day. Energy producers led advances as crude jumped more than 1.5 percent. The 10-year Treasury yield interrupted its march toward 3 percent. The dollar snapped a four-day rally.

Rate-hike jitters returned to the market after the Fed’s January meeting minutes showed a central bank confident the economy is poised to take off. Subsequent data confirmed that view, but also brought signs of rising inflation that central bank had warned might fall short of its targets.

“Investors are just nervous about interest rates,” said Paul Nolte, a portfolio manager at Kingsview Asset Management in Chicago. “Everybody is waiting for more economic data to confirm or deny whatever the Fed position is. It’s a big case of the nerves.”

With recent data underpinning the view that inflation is no longer lagging, the OIS space shows traders pricing in just shy of three U.S. rate hikes over the next 12 months. The S&P 500 remains more than 5 percent from its all-time high, as February shapes up as one of the worst months for global equities in more than a year. The Cboe Volatility Index slipped below 20, well above its average for the past year, when unprecedented calm gripped markets.

“We’re in the clear from that initial correction,” Peter Jankovskis, co-chief investment officer at Oakbrook Investments, said by phone. “Right now the trend is going to be to continue a recovery from that absent some other upset in the marketplace. Whether we’re totally clear of volatility, I would come down on the opposite side of that.”

Evan Brown, UBS Asset Management Director, gives his take on the FOMC minutes.

Source: Bloomberg)

In Europe the Stoxx 600 Index slid as almost all the major national equity gauges in the region fell. It was a similar picture across Asia, though China’s market bucked the trend as it reopened after a holiday.

Elsewhere, gold erased a drop to trade little changed as most commodities retreated. The pound was weaker as data showed the U.K. economy expanded less than previously estimated in the fourth quarter, and the euro edged up as minutes from the European Central Bank showed officials continue to lay the ground for a shift in policy language in the first half of the year.

Terminal users can read more in our markets blog.

Here are some key events scheduled for this week:

  • U.K. PM Theresa May is locking down her ministers in a bid to agree what kind of post-Brexit trade deal they want from the EU.
  • Companies announcing earnings include Woolworths and Royal Bank of Scotland.

These are the main moves in markets:

Stocks

  • The S&P 500 rose 0.1 percent at 4 p.m. in New York, paring a gain that reached 1.1 percent.
  • The Nasdaq Composite Index ended lower, while the Dow Jones Industrial Average rose 165 points.
  • The Stoxx Europe 600 Index decreased 0.2 percent.
  • The MSCI Asia Pacific Index dipped 0.6 percent to the lowest in a week.
  • The MSCI Emerging Market Index sank 0.7 percent, the largest decrease in almost two weeks.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.4 percent, the first retreat in a week.
  • The euro gained 0.3 percent to $1.2325, the largest advance in a week.
  • The Japanese yen jumped 1 percent to 106.701 per dollar, the first advance in a week and the largest climb in more than two weeks.
  • The MSCI Emerging Markets Currency Index rose 0.2 percent.

Bonds

  • The yield on 10-year Treasuries fell three basis points to 2.92 percent.
  • The two-year yield fell one basis point to 2.25 percent.
  • Germany’s 10-year yield decreased two basis points to 0.706 percent.

Commodities

  • West Texas Intermediate crude rose to the highest in two weeks as American supplies unexpectedly shrank. Futures rose 1.8 percent to settle at $62.77 a barrel.
  • Gold futures climbed 0.1 percent to $1,333.60 an ounce, the first advance in a week.

— With assistance by Samuel Potter, and Sarah Ponczek

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE