Stocks Hit Record at Close as Treasuries Retreat: Markets Wrap

(Bloomberg) -- U.S. equities rallied late to close at a record high, while 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 gained for a straight third day after drifting much of the session. The benchmark briefly crossed above 3,000, while the Dow Jones Industrial Average surpassed 27,000. A mid-morning tweet from President Donald Trump, complaining about China trade policy, sent equities into a fleeting swoon and showed how sensitive the market remains to trade-related developments. Financial and technology shares led gainers in the the S&P, while real estate and communications lagged.

An oil rally stalled out as investors weighed the threat of a tropical storm off the U.S. Gulf Coast against the prospects of more trade conflict. Yields on 10-year Treasuries hit a one-month high.

Federal Reserve Chair Jerome Powell, who struck a dovish tone before a congressional panel Wednesday, returned to Capitol Hill to answer senators’ questions and suggested that the central bank has room to ease as the tie between the inflation and jobless rates has broken down.

“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, putting in 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.

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:

Stocks

• The S&P 500 Index rose 0.2% to close at a record high as of 4:01 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%.

Currencies

• The Bloomberg Dollar Spot Index dipped 0.1% to the lowest in a week.
• The euro climbed less than 0.05% to $1.1255.
• The British pound climbed 0.2% to $1.2525.
• The Japanese yen rose less than 0.05% to 108.45 per dollar.

Bonds

• The yield on 10-year Treasuries climbed seven basis points to 2.13%, the highest in four weeks.
• Britain’s 10-year yield jumped eight basis points to 0.836%, the largest surge in 14 weeks.

Commodities

• West Texas Intermediate crude rose 0.1% to $60.47 a barrel.
• Gold dipped 0.8% to $1,407.11 an ounce.

--With assistance from Ruth Carson, Chester Yung, Cormac Mullen, Gregor Stuart Hunter and Laura Curtis.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Olivia Rinaldi in New York at orinaldi1@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, ;Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn, Yakob Peterseil

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