Tech Leads Stocks Higher as Stimulus Bets Increase: Markets Wrap

(Bloomberg) -- U.S. stocks advanced as investors ramped up bets that the Federal Reserve will cut rates this month to shore up an economy showing increasing signs of weakness. Treasuries rallied.

The S&P 500 rose the most in a month after roaring back from a drop of more than 1% sparked by the weakest reading on the services sector in three years. Odds the Federal Reserve cuts at its next meeting spiked as the data came just after the worst factory numbers in a decade. Investors are also finding their footing after the benchmark fell around 3% over the last two sessions, with one of the hardest hit sectors, tech, pacing gains.

The yield on 10-year Treasuries dropped for the sixth straight day, while the dollar fell for a third time in a row.

“This downturn is starting to spread and that means the tea leaf readers at the Fed are going to be teeing up a third rate cut this year when they next meet again at the end of this month,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “Policymakers are going to need a bigger gun to stop this avalanche of bad news from dragging down business and consumer confidence even further. Rate cuts are coming. Lots of them. Bet on it.”

This week’s march of weak data confirmed investor concerns that the global economy is struggling for traction, and may be seeping from the manufacturing sector into consumer sentiment, as the U.S.-China trade war churns in the background. That’s also driving bets that the Fed will pump more stimulus into the economy this year. Focus now turns to the nonfarm payrolls figure on Friday, when Federal Reserve Chairman Jerome Powell will also speak.

Elsewhere, the yen continued to strengthen along with gold. West Texas crude fell below $53 a barrel.

Here are some key events coming up this week:

• The monthly “nonfarm” jobs report is due on Friday.
• Federal Reserve Chairman Jerome Powell is set to speak Friday.
• The Reserve Bank of India sets policy on Friday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.8%, the most since Sept. 5, at 4 p.m. New York time.
• The Nasdaq Composite Index gained 1.1%, while the Dow Jones Industrial Average added 0.5%.
• The Stoxx Europe 600 Index was little changed.
• FTSE 100 Index dropped 0.6%.
• The MSCI Emerging Market Index increased 0.3%.

Currencies

• The Bloomberg Dollar Spot Index declined 0.2%.
• The euro rose 0.1% at $1.0970.
• The British pound climbed 0.3% to $1.2343.
• The Japanese yen rose 0.3% to 106.88 per dollar.

Bonds

• The yield on 10-year Treasuries dipped six basis points to 1.53%.
• The yield on two-year Treasuries fell nine basis points to 1.39%.
• Germany’s 10-year yield sank five basis points to -0.60%.
• Britain’s 10-year yield decreased four basis points to 0.458%.

Commodities

• West Texas Intermediate crude fell 0.7% to $52.26 a barrel.
• Gold rose 0.2% to $1,511.00 an ounce.

--With assistance from Steve Matthews, Adam Haigh, Todd White and Molly Smith.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Yakob Peterseil

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