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U.S. Stocks Rise With Treasuries, Dollar Mixed: Markets Wrap

Updated on
  • Treasury yields fall along with those on core euro-area bonds
  • S&P 500 index erases weekly decline; crude holds weekly gain

'I'm 100% Buying the Dip' on Non-Inverted Yield Curve, Says Dwyer

U.S. stocks rallied, Treasuries advanced and the dollar slipped as investors grew confident that the Jerome Powell-led Federal Reserve won’t rush to raise interest rates as the economy picks up steam.

The S&P 500 Index pushed past its average price for the past 50 days and erased losses for the week with its biggest gain in almost three weeks. The gauge extended gains in afternoon trading, reversing a four-day pattern had seen it swoon. The 10-year Treasury yield slipped to 2.87 percent, roughly where it started the week, as investors dissect the Fed’s semiannual monetary policy report to Congress. The dollar was flat versus major peers.

The report indicated that the central bank sees the labor market at or beyond full employment, while some pockets of finance are showing signs of rising leverage and high valuation. Concern that the Fed would step up the pace of rate hikes rattled markets earlier in the week.

“Concerns about interest raters are overblown,” Don Townswick, the director of equities at Hartford, Connecticut-based Conning Inc, said by phone. “The markets will tend to remain strong. Historically markets have been strong during the first 18 to 24 months of rising interest rates as long as inflation is under control.”

The Stoxx Europe 600 Index rose as gains in telecom shares offset declines in retailers. The MSCI Asia Pacific Index rose earlier, underpinned by gains from Sydney to Shanghai. Yields on 10-year German bunds dropped to the lowest since January. The common currency slipped.

Traders seem unconvinced by the Federal Reserve’s hawkish tilt, with the market still pricing in less than the three quarter-point rate hikes that officials have signaled as likely this year. Minutes of the Fed’s January meeting indicated confidence the economy is strengthening amid signs inflation is rising. Meanwhile, bond investors took heart from an account of the European Central Bank’s most recent meeting, which showed policy makers aren’t yet ready to remove a pledge to expand its asset-buying program if needed.
Elsewhere, the pound gained after U.K. Prime Minister Theresa May won the backing of her divided cabinet to seek a trade deal with the European Union. WTI crude oil retreated, but remained on track for a second weekly increase that was supported by a surprise pullback in U.S. inventories.

In China, the government seized temporary control of high-profile conglomerate Anbang Insurance Group Co. Markets took the news in stride, however, and the Shanghai Composite Index rose 0.6 percent.

Terminal users can read more in our markets blog.

Here are some key events scheduled for the remainder of the week:

  • Chairman Jerome Powell testifies before House and Senate committees next week

These are the main moves in markets:

Stocks

  • The S&P 500 rose 1.6 percent at 4 p.m. in New York. It rose 0.6 percent on the week.
  • The Nasdaq Composite climbed for the first time in five days. It added 1.3 percent in the four days.
  • The Stoxx Europe 600 Index increased 0.2 percent to finish the week higher.
  • The MSCI Asia Pacific Index advanced 0.9 percent.
  • Japan’s Topix index rose 0.8 percent, Hong Kong’s Hang Seng Index climbed 1 percent, and South Korea’s Kospi was up 1.5 percent.
  • Australia’s S&P/ASX 200 Index gained 0.8 percent.

Currencies

  • The Bloomberg Dollar Spot Index fell less than 0.1 percent.
  • The euro decreased 0.2 percent to $1.2301.
  • The British pound advanced 0.1 percent to $1.3971.
  • The Japanese yen fell 0.1 percent to 106.826 per dollar.

Bonds

  • The yield on 10-year Treasuries fell five basis points to 2.87 percent. It rose as high as 2.95 percent on Wednesday.
  • The two-year yield was flat at 2.24 percent.
  • Germany’s 10-year yield fell five basis points to 0.653 percent, the lowest in four weeks.
  • Japan’s 10-year yield dipped less than one basis point to 0.05 percent.

Commodities

  • West Texas Intermediate crude advanced 1.2 percent to $63.56 a barrel, capping a second weekly gain.
  • Gold futures declined 0.1 percent to $1,331.30 an ounce.

— With assistance by Cormac Mullen, Vassilis Karamanis, and Robert Brand

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