Stocks Climb, Gold Jumps to Record on Fed Wagers: Markets Wrap

(Bloomberg) -- U.S. stocks climbed, led by technology shares, on speculation the Federal Reserve will reinforce its dovish message. Gold jumped to a record, while the dollar fell.

The S&P 500 erased last week’s drop as the rebound in tech overshadowed a slide in banks. A slew of earnings reports from Nasdaq 100 companies over the next few days will offer clues on whether the gauge’s record-breaking advance through mid-July has been justified. Moderna Inc. soared after getting a second round of U.S. funding for an experimental vaccine for Covid-19 and kicking off its late-stage trial.

Setbacks in the global fight against coronavirus will probably push Fed Chairman Jerome Powell to signal Wednesday that rates will stay near zero for longer. Infections slowed in California, Arizona and Florida, though reported numbers are often incomplete on weekends. High-frequency economic indicators are pointing to a slowdown, which will only reinforce the Federal Open Market Committee’s dovish guidance.

“There can be some encouragement from low interest rates in terms of risk appetite,” said Chad Oviatt, director of investment management at Huntington Private Bank. “The Fed keeping interest rates low is still stimulative and that’s a good thing to have when there is uncertainty around the pace of economic recovery.”

Hedge funds rushed to unwind their bullish bets on U.S. tech stocks last week. They cut their net-long positions in Nasdaq 100 mini futures in half after pushing them to a nearly three-year high earlier this month.

Here are some key events coming up:

• Earnings include Apple, Amazon.com, Alphabet, Chevron, Rio Tinto, L’Oreal, Caterpillar, Samsung, Barclays and Credit Suisse.
• The Federal Open Market Committee holds its policy meeting on Tuesday, with an announcement due on Wednesday.
• U.S. second-quarter GDP is expected on Thursday.
• China PMI data comes Friday.

These are some of the main moves in markets:

Stocks

• The S&P 500 rose 0.7% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index fell 0.3%.
• The MSCI Asia Pacific Index increased 0.8%.

Currencies

• The Bloomberg Dollar Spot Index sank 0.9%.
• The euro climbed 0.8% to $1.1746.
• The Japanese yen appreciated 0.7% to 105.40 per dollar.

Bonds

• The yield on 10-year Treasuries increased two basis points to 0.61%.
• Germany’s 10-year yield dipped four basis points to -0.49%.
• Britain’s 10-year yield fell four basis points to 0.109%.

Commodities

• The Bloomberg Commodity Index rose 0.5%.
• West Texas Intermediate crude climbed 0.8% to $41.62 a barrel.
• Gold strengthened 1.9% to $1,938.65 an ounce.

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