Stocks Jump Most Since January on Jolt From Powell: Markets Wrap
(Bloomberg) -- U.S. stocks climbed the most since January as Federal Reserve Chairman Jerome Powell signaled an openness to rate cuts and Mexican officials said they expect to avoid Trump administration tariffs.
Big banks surged as Wells Fargo analyst Mike Mayo said the industry would be set to “party like it’s 1995” if rates were cut. Treasury yields rose from multiyear lows as Powell stopped short of signaling an imminent move. Carmakers and chip manufacturers rallied as Mexico’s president said he hopes to reach a deal with the U.S. before next week’s deadline, with his foreign minister seeing 80% odds to negotiate a solution. The peso jumped.
Later in day, the Washington Post reported that Republican senators warned Trump administration officials they were ready to block efforts to impose duties on Mexican imports. Economists see U.S. tariffs on those goods denting growth and adding to headwinds that could prompt both countries to cut interest rates in the next year.
“Given the ongoing uncertainty on both the interest rate and trade front, any clarity will likely be welcomed by the market,” said Mike Loewengart, vice president of investment strategy at E*TRADE Financial. “A lot of market-watchers will be reading the tea leaves from this week’s jobs data, which could hold significant weight for the Fed’s next rate move.”
Elsewhere, gains in automakers and banks pushed European stocks higher. Oil rebounded as signs of tightening supply from OPEC+ temporarily overshadowed concern over global demand. Bitcoin fell as much as 12%.
Here are some notable events coming up:
- China President Xi Jinping begins a two-day visit to Russia on Wednesday.
- Theresa May steps down on Friday as leader of the Conservative Party.
- Friday’s U.S. jobs report is projected to show payrolls rose by 180,000 in May, unemployment held at 3.6%, a 49-year low, and average hourly earnings growth sustained a 3.2% pace.
These are some of the main moves in markets:
- The S&P 500 surged 2.1% to 2,803.27 as of 4 p.m. New York time.
- The Stoxx Europe 600 Index climbed 0.6%.
- The MSCI Asia Pacific Index declined 0.1%.
- The Bloomberg Dollar Spot Index fell 0.2%.
- The euro gained 0.1% to $1.1253.
- The British pound increased 0.3% to $1.2701.
- The yield on 10-year Treasuries climbed five basis points to 2.12%.
- Germany’s 10-year yield fell less than one basis point to -0.21%.
- Britain’s 10-year yield jumped four basis points to 0.902%.
- The Bloomberg Commodity Index advanced 0.3%.
- West Texas Intermediate crude rose 0.4% to $53.48 a barrel.
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