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markets

U.S. Equities Rally to Best Month in Three Years: Markets Wrap

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U.S. Equities Rally to Best Month in Three Years: Markets Wrap

  • Treasury yields decline after dovish Federal Reserve statement
  • Positive reports from General Electric, Facebook fuel jump
Pimco Says Invest Like It's Late Cycle, Not End of Cycle

U.S. stocks rallied to cap their biggest monthly gain in three years as better-than-expected corporate earnings and the Federal Reserve’s dovish turn lifted investor sentiment.

Technology shares led advances as the S&P 500 Index closed at an eight-week high. General Electric Co. and Facebook Inc. both surged more than 10 percent after traders cheered their quarterly results. Emerging-market shares advanced while Treasury yields fell a day after signals from the Fed that it will be “patient” on interest-rate moves and flexible on reducing its balance sheet.

“The market is back to being focused on earnings,” Kate Warne, an investment strategist at Edward Jones, said in an interview at Bloomberg’s New York headquarters. “Much of the news has been reassuring and that’s supported rising stocks.”

S&P 500 set for best month in more than three years

The S&P 500 posted its best month since October 2015 after Wednesday’s statement from the Fed helped ease fears that the central bank would continue with plans to tighten policy even in the face of cooling economic data. Outside the earnings realm, investors have an eye on meetings between Chinese negotiators and their counterparts in Washington to resolve the trade dispute. President Donald Trump said discussions are going well but that no deal will be final until he meets with Chinese President Xi Jinping “in the near future.”

Elsewhere, the pound was steady as the European Union and U.K. appeared on a collision path over Brexit. The Stoxx Europe 600 Index ended little changed after a positive start, with banks among the biggest drags as energy companies rose following strong results from Royal Dutch Shell.

In Asia, equities in Japan and Hong Kong rallied, while Chinese stocks posted a modest advance.

Among key events in the coming days:

  • Meetings between Chinese President Xi Jinping’s top economic aide, Vice Premier Liu He, and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin continue on Thursday.
  • Earnings season rolls on.
  • Chinese financial markets will close next week for the Lunar New Year holiday.

These are the main moves in markets:

Stocks

  • The S&P 500 Index rose 0.9 percent, extending the monthly gain to 7.9 percent.
  • The Stoxx Europe 600 Index was little changed.
  • The MSCI Emerging Market Index jumped 1.3 percent to a four-month high.
  • The Nikkei-225 Stock Average rose 1.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index was little changed.
  • The euro slipped 0.3 percent to $1.1444.
  • The British pound was little changed at $1.3114.
  • The Japanese yen strengthened 0.1 percent to 108.91 per dollar.

Bonds

  • The yield on 10-year Treasuries decreased five basis points to 2.63 percent.
  • Germany’s 10-year yield declined four basis points to 0.15 percent.
  • Britain’s 10-year yield declined four basis points to 1.22 percent.
  • Italy’s 10-year yield fell one basis point to 2.58 percent.

Commodities

  • West Texas Intermediate crude fell 0.3 percent to $54.02 a barrel.
  • Gold was little changed at $1,319.78 an ounce.

— With assistance by Gregor Stuart Hunter, Adam Haigh, Samuel Potter, and Yakob Peterseil