Stocks Rise; Dollar Weakens Versus Majors Peers: Markets Wrap
The New York Stock Exchange (NYSE) logo is displayed on the trading floor in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Stocks Rise; Dollar Weakens Versus Majors Peers: Markets Wrap

U.S. stocks edged higher and benchmark Treasury note yields lingered at 10-month highs as investors mulled the prospects of the economic recovery and vaccine rollout.

The S&P 500 closed in the green after fluctuating between gains and losses most of the trading session, with the energy, materials and consumer discretionary sectors leading gainers. The Dow Jones Industrial and Nasdaq Composite rose more than the benchmark index. Crude oil approached a 11-month high as the dollar weakened following a three-day rally. Corn futures surged by the exchange limit to the highest level for a most-active contract since May 2014.

The mood across markets remained mostly positive even as investors assessed how the rise in Treasury yields changes the financial landscape. While progress on a vaccine gives reason to be hopeful, there are lingering concerns over the speculative excess and froth that’s driven stock markets to all-time highs in the middle of a pandemic.

“What I think investors are most focused on is the digesting of what is shifting fiscal policy,” said David Bianco, chief investment officer of the Americas at DWS Group. “We’re beginning to lose the anchor on some long-term key benchmark interest rates.”

Stocks Rise; Dollar Weakens Versus Majors Peers: Markets Wrap

Yields on Treasury 10-year notes pared an earlier rise after a government auction of $38 billion of the securities was met with solid demand. The spread between the rate on the two- and 10-year notes had risen every single day this year as investors bet on additional U.S. fiscal stimulus, spurring more bond issuance and higher yields on longer-maturity Treasuries.

In Washington, the House is moving forward on an expected vote to impeach the President Donald Trump for the second time in little more than a year.

“I wrap up the market’s concerns into an easy-to-remember acronym – EIEIO – which stands for EPS-Impeachment-Energy Prices-Interest Rates-Overvaluation,” said CFRA Research Chief Investment Strategist Sam Stovall. “The market is vulnerable to a setback as many measures are at extremes, encouraged by the ‘Blue Ripple’s’ push for additional stimulus.”

Elsewhere, Europe’s Stoxx 600 Index traded little changed. After Bitcoin suffered steep declines on Monday, the largest cryptocurrency continued its wide swings.

In Asia, China’s CSI 300 Index rallied to a 13-year high, driven by a surge in financial and securities stocks. The yuan reached the highest since 2018 versus a basket of trading partners’ currencies on upbeat growth prospects.

Malaysia’s stock benchmark slipped as much as 1.6% after the nation’s king declared a state of emergency until August.

Stocks Rise; Dollar Weakens Versus Majors Peers: Markets Wrap

Here are some key events coming up:

  • JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., as well as firms ranging from Taiwan Semiconductor Manufacturing Co. to Infosys Ltd., are among those due to report earnings.
  • EIA crude oil inventory report is due Wednesday.
  • European Central Bank’s Christine Lagarde speaks at an online conference Wednesday.
  • U.S. consumer-price inflation figures are due Wednesday.
  • U.S. President-elect Joe Biden plans to lay out proposals for fiscal support on Thursday.
  • Fed Chair Jerome Powell takes part in a webinar on Thursday.
  • U.S. initial jobless claims data are due Thursday.
  • U.S. retail sales, industrial production, business inventories and consumer sentiment figures are due Friday.

These are some of the main moves in markets:

Stocks

  • The S&P 500 Index was little changed at 3,801.19 as of 4:06 p.m. New York time.
  • The Dow Jones Industrial Average rose 0.2% to 31,068.69.
  • The Nasdaq Composite Index climbed 0.3% to 13,072.43.
  • The Stoxx Europe 600 Index was little changed at 408.61.
  • The MSCI All-Country World Index jumped 0.3% to 660.66.

Currencies

  • The Bloomberg Dollar Spot Index sank 0.6% to 1,120.16, the biggest dip in almost six weeks.
  • The euro increased 0.5% to $1.2205, the largest increase in more than three weeks.
  • The British pound jumped 1.1% to $1.3667, the strongest in more than a week on the biggest jump in more than two months.
  • The Japanese yen strengthened 0.5% to 103.73 per dollar, the first advance in a week and the largest climb in more than five weeks.

Bonds

  • The yield on 10-year Treasuries dipped one basis point to 1.13%, the first retreat in more than a week.
  • Germany’s 10-year yield gained three basis points to -0.47%, the highest in more than four months.
  • Britain’s 10-year yield increased four basis points to 0.352%, reaching the highest in almost six weeks on its sixth straight advance and the biggest climb in almost three weeks.

Commodities

  • West Texas Intermediate crude increased 1.7% to $53.15 a barrel, hitting the highest in almost a year with its sixth consecutive advance.
  • Silver strengthened 2.7% to $25.57 per ounce, the first advance in a week.

©2021 Bloomberg L.P.

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