Stocks Surge, Bonds Retreat as Risk-On Resumes: Markets Wrap

(Bloomberg) -- A risk-on tone gripped U.S. markets, with equities pushing to session highs and bond yields climbing on speculation that President Donald Trump’s policies won’t disrupt global trade and economic growth.

Equities broke out from a mixed session following a Bloomberg report that suggested the White House isn’t actively looking to challenge Amazon.com’s business despite days of attacks from the president. That news came after the Director of the National Trade Council said “smart money” would buy stocks following Monday’s rout, sparked in part by tariff angst and Donald Trump’s bluster against one of the nation’s largest companies.

“What we’ve seen first with Navarro and secondarily today with some of the headlines is them sort of pulling back on some of this,” Tom Essaye, founder of “The Sevens Report,” said by phone. “What we’re seeing is the administration, or one specific person, realizing there are unintended consequences of whatever fight he wants to pick at the moment. The market decline probably got bad enough yesterday to where it got people’s attention.”

The reversion to risk taking followed the S&P 500’s first close below its 200-day moving average since the Brexit vote, a rout that left major averages in correction territory. The U.S. equity benchmark is still more than 9 percent below its January record.

Investors are also contending with tighter monetary policy from the Federal Reserve, with Friday’s government jobs report the next major data point on the world’s largest economy. After that, earnings season looms, with analyst predicting a surge in profits.

“What we are really seeing across the economies and markets are opposing forces playing out: in the economy you are seeing Fed versus inflation, in markets you are seeing momentum versus fundamental supports,” JPMorgan Asset Management Global Market Strategist Hannah Anderson told Bloomberg TV.

Terminal users can read more in our markets live blog.

Here are some key events coming up this week:

• U.S. employment data are due Friday; the jobless rate probably fell in March after holding at 4.1 percent for five straight months.
• The Reserve Bank of India decides on policy Thursday.

These are the main moves in markets:

Stocks

• The S&P 500 rose 1.3 percent as of 4 p.m. in New York.
• The Nasdaq 100 Index added 1.1 percent.
• Trading of Spotify shares began early Tuesday afternoon in New York in an unusual direct listing, giving the company a market value of about $28 billion.
• The Stoxx Europe 600 Index fell 0.5 percent, the first retreat in more than a week.
• The MSCI Asia Pacific Index dipped 0.1 percent.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1 percent to the lowest in a week.
• The euro decreased 0.3 percent to $1.2262, the weakest in two weeks.
• The British pound gained 0.1 percent to $1.4053.
• The Japanese yen fell 0.7 percent to 106.63 per dollar.

Bonds

• The yield on 10-year Treasuries gained five basis points to 2.78 percent, the highest in a week.
• Germany’s 10-year yield was unchanged at 0.50 percent, the lowest in 12 weeks.

Commodities

• West Texas Intermediate crude gained 0.9 percent to $63.55 a barrel.
• Gold futures fell 0.9 percent to $1,335.40 an ounce.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net, Sarah Ponczek in New York at sponczek2@bloomberg.net.

To contact the editor responsible for this story: Jeremy Herron at jherron8@bloomberg.net.

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