U.S. Stocks Rise With Gold, Dollar Slips on Powell: Markets Wrap

(Bloomberg) -- U.S. stocks rose toward all-time highs, gold rallied and the dollar fell as comments by Jerome Powell cemented market bets for a rate cut this month. Treasuries were mixed.

Equities that had slumped since Friday’s strong jobs report rallied back to intraday records after the Fed chairman signaled a willingness to lower rates, citing a slowing global economy and trade issues. Minutes from the Fed’s June meeting confirmed an inclination among officials to cut rates soon.

Gains faded as Powell testified to Congress, with financial shares leading the pullback. The S&P 500 briefly topped 3,000 for the first time.

“Psychologically, when you hit those round numbers you get a little bit of resistance -- you hit it and it fails,” said Aaron Clark, portfolio manager at GW&K Investment Management. “The big round numbers, you tend to get a level that’s tough to power through.”

The yield on 10-year Treasuries fell as low as 2.04% after climbing above 2.10% for the first time in a month before settling around 2.06%. Two-year rates slumped while longer-dated bond yields rose. The dollar weakened versus major peers, gold topped $1,400 again and oil rose above $60 a barrel in New York.

“A rate cut in July is now all but certain,” said James McCann, senior global economist at Aberdeen Standard Investments. “The strength of last week’s jobs number did lead some to think that the Fed may pause for thought. It’s clear from this that they won’t.”

Powell’s remarks came ahead of two days of testimony in Congress on the economic and policy outlook. With both equities and bonds sitting on outsize gains since the start of the year, it’s unclear what further impetus they can get given that traders are already discounting a cycle of interest-rate cuts.

In Europe, strong manufacturing data from France and low demand at an auction of German bunds weighed on government debt. The pound halted a drop to a two-year low as data showed the U.K. economy rebounded in May. The trading session in Asia was mixed, with modest gains in Hong Kong and South Korea and slides in Japan and China.

Here are some key events coming up:

• Powell testifies to Senate Banking Committee on Thursday
• ECB minutes are due on Thursday.
• A key measure of U.S. inflation -- the core consumer price index, due Thursday -- is expected to have increased 0.2% in June from the prior month, while the broader CPI is forecast to remain unchanged.
• U.S. producer prices are due on Friday.

Here are the main moves in markets:

Stocks

• The S&P 500 rose 0.5% to 2,993 as of 4 p.m. New York time.
• The Dow Jones Industrial Average advanced 0.3%, while the Nasdaq-100 Index gained 1% to a record high.
• The Stoxx Europe 600 Index declined 0.2%.
• The MSCI Asia Pacific Index climbed 0.3%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%.
• The euro climbed 0.4% to $1.125.
• The British pound rose 0.3% to $1.2506.
• The Japanese yen added 0.4% to 108.448 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 2.06%.
• The two-year rate dropped nine basis points to 1.82%.
• Germany’s 10-year yield climbed five basis points to -0.31%.

Commodities

• The Bloomberg Commodity Index climbed 1.8%.
• West Texas Intermediate crude surged 4.4% to $60.35 a barrel.
• Gold futures rose 1.3% to $1,419 an ounce.

--With assistance from Adam Haigh, Sophie Caronello, Laura Curtis, Rita Nazareth and Colin Beresford.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Jeremy Herron in New York at jherron8@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Robert Brand

©2019 Bloomberg L.P.