Stocks, Treasury Yields Climb After Day-Long Dives: Markets Wrap

(Bloomberg) -- U.S. equities and benchmark Treasury yields mounted an impressive comeback late in the day, reversing sharp drops as investors turned more positive on the outlook for global growth amid central-bank moves to ease monetary policy.

The S&P 500 Index eked out a modest gain after tumbling as much as 2%, with CVS Health Corp.’s biggest jump in almost eight years and an advance for the biggest tech companies supporting the gauge. Yields on 10-year Treasuries edged higher after an earlier plunge. Currency markets were volatile after rate cuts in New Zealand, India and Thailand.

Traders are weighing asset valuations after this week saw the biggest one-day plunge in global equities since February 2018 amid fear an escalation in the trade war will spur a global recession. Threats of expanded tariffs are also creating uncertainty in corporate boardrooms, spurring concern there will be a pullback in capital outlays and a drop in earnings. Hope is resting on central banks to buoy growth.

“A lot of investors feel like we’re getting ready to hit a wall because of the actions of the trade war,” said Bob Phillips, managing principal at Spectrum Management Group. “I’m hoping wiser heads will prevail in this trade battle and something will work out.”

New Zealand’s dollar tumbled after a bigger-than-expected rate cut. The yuan dipped after China set its reference rate slightly weaker than expected. India’s rupee and the Thai baht slipped. The U.S. dollar was steady, while the yen gained and gold rallied toward $1,500 an ounce.

The dovish moves by three central banks underscore the global shift toward easier policy even after the Federal Reserve’s unexpectedly hawkish stance last week. President Donald Trump again on Wednesday urged the Fed to ease policy, saying in a tweet that “They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW.”

Elsewhere, oil extended a decline after Brent crude closed in a bear market on Tuesday. The Stoxx Europe 600 erased most of an advance that reached 1.1% at one point. Shares were mixed and calmer in Asia, with Japanese stocks closing barely changed while equities in Shanghai fell.

These are some key events to watch out for this week:

• A string of Fed policy makers speak this week, including Chicago’s Charles Evans on Wednesday.

Here are the main moves in markets (all sizes and scopes are on a closing basis):

Stocks

• The S&P 500 Index rose 0.1% at the close of trading in New York.
• The Stoxx Europe 600 Index rose 0.2%.
• The MSCI AC Asia Pacific Index rose 0.1%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro rose 0.1% to $1.1215.
• The British pound declined 0.2% to $1.2146.
• The Japanese yen advanced 0.2% to 106.21 per dollar.

Bonds

• The yield on 10-year Treasuries rose one basis point to 1.71%.
• Germany’s 10-year yield decreased five basis points to -0.59%, hitting the lowest on record.
• Britain’s 10-year yield declined three basis points to 0.48%, the lowest on record.
• Japan’s 10-year yield dipped one basis point to -0.2%, the lowest in about three years.

Commodities

• West Texas Intermediate crude fell 2.4% to $52.32 a barrel, the lowest since early June.
• Gold gained 2% to $1,504.66 an ounce, the highest in more than six years.

©2019 Bloomberg L.P.