NEW YORK (July 11): U.S. equities tested key thresholds, overcoming an earlier setback triggered by a tweet from Donald Trump, as technology shares pushed higher on the eve of earnings. Treasuries retreated after the latest American inflation reading came in hotter than anticipated, the dollar dropped for a second day and gold slipped.
The S&P 500 reached 3,000 Thursday, while the Dow Jones Industrial Average surpassed 27,000. Microsoft Corp, Nvidia Corp and Apple Inc anchored a rally in the technology sector. Oil gained as Tropical Storm Barry menaced American refineries and offshore crude production.
Gyrations in equities earlier in the session showed how sensitive the market remains to trade-related developments. Trump previously said he had secured a Chinese promise to buy more agricultural products, but Chinese official media says only that Trump hoped China would import more American goods as part of the trade-war truce. Today, the president tweeted that China “is letting us down,” which briefly weighed on advances in stock benchmarks.
Federal Reserve Chair Jerome Powell, who struck a dovish tone before a congressional panel Wednesday, returned to Capitol Hill to answer senators’ questions. Traders will be following that testimony for further clues, after a measure of U.S. consumer prices rose more than forecast in June.
“Inflation appears to have stabilized and this will put a wrench in some Fed rate-cut bet forecasts,” Edward Moya, senior market analyst at Oanda, wrote in a note. “With wage pressure not delivering a powerful effect on inflation, we should still see day two of Fed Chair Powell’s testimony keep the rate cut expectations in place for the July 30-31st meeting.”
The Stoxx Europe 600 Index faded late in the session, heading for its fifth straight daily drop. Shares rallied across most of Asia, with the South Korean and Hong Kong markets outperforming and stocks in China edging higher. Emerging-market equities jumped alongside developing-nation currencies, while the pound continued its rebound from a two-year low, as the greenback fell. European government bonds were mixed.
This year’s rallies across stocks, bonds and credit got a fresh jolt on Wednesday, thanks to comments from Powell that persuaded investors rates are headed lower by at least a quarter-point in July. Minutes from the central bank’s last meeting further cemented expectations for a cut in borrowing costs.
Here are some key events coming up:
U.S. producer prices are due on Friday.
Here are the main moves in markets:
The S&P 500 Index gained 0.3% as of 12:09 p.m. New York time.
The Stoxx Europe 600 Index fell 0.1%.
The U.K.’s FTSE 100 Index fell 0.3%, its sixth consecutive decline.
The MSCI Emerging Market Index increased 0.6%.
The Bloomberg Dollar Spot Index dipped 0.1% to the lowest in a week.
The euro climbed 0.1% to US$1.1259.
The British pound climbed 0.3% to US$1.254.
The Japanese yen gained 0.1% to 108.34 per dollar.
The yield on 10-year Treasuries climbed three basis points to 2.09%, the highest in more than three weeks.
Britain’s 10-year yield jumped eight basis points to 0.836%, the largest surge in 14 weeks.
West Texas Intermediate crude rose 0.6% to US$60.78 a barrel.
Gold dipped 0.5% to US$1,412.54 an ounce.