Stocks Rise With Dollar, Treasuries Fall on Economy Optimism

(Bloomberg) -- U.S. stocks rose, with technology shares pacing gains amid deal news, while Treasuries fell as optimism about the economy’s strength overshadowed renewed geopolitical angst after a failed coup attempt in Turkey. Crude retreated.

The S&P 500 Index notched its fifth record in six sessions, and the Nasdaq 100 Index closed at the highest level of the year, with chipmakers rising after SoftBank Group Corp. agreed to buy ARM Holdings Plc for $32 billion. Treasuries extended the worst week in a year and the yen headed for the lowest close this month. Turkey’s lira clawed back some of its losses from Friday, sparked by an attempted military putsch. 

Stocks Rise With Dollar, Treasuries Fall on Economy Optimism

Financial markets have shown resilience after Friday’s failed coup attempt in Turkey, with investors resuming a risk-on approach that pushed U.S. stocks to four consecutive records last week and sent Treasuries and the yen to their worst weeks in at least a year. As political tension in the U.K. eases and central banks signal additional stimulus, investors are turning to corporate profits for evidence of economic strength. 

“The focus for the market is on earnings, and more importantly guidance, focusing on the impact of the economy, elections, and how the dollar is influencing business conditions,” said Kevin Kelly, the chief investment officer at Recon Capital Partners in New York. “It’s hard for a market that is preoccupied on management’s every word to be influenced by Turkey.”

Stocks

The S&P 500 rose 0.2 percent to 2,166.79 at 4 p.m. in New York, putting the gauge on track for a fifth record in the past six sessions. The Dow Jones Industrial Average had its seventh straight gain, matching a winning streak in March.

Bank of America Corp. jumped 3.6 percent after the second-biggest U.S. bank by assets reported higher profit in its four main business units. More than 90 S&P 500 companies report earnings this week, with those from International Business Machines Corp., Yahoo! Inc. and Netflix Inc. due later today.

A surge in ARM Holdings after the deal announcement pushed chipmakers higher, boosting European equities at the close of a volatile session. The Stoxx Europe 600 closed higher by 0.2 percent, rising to the highest since June 23.

Turkey’s Borsa Istanbul 100 Index sank 7.1 percent. The country’s equity market was closed when the coup erupted. President Recep Tayyip Erdogan ordered reprisals after attempted takeover led to the deaths of more than 190 civilians.

Currencies

The Bloomberg Dollar Spot Index was little changed. It climbed 0.4 percent in the last session as U.S. reports showed retail sales rose in June by more than economists predicted and manufacturing expanded by the most since January. The odds of the Federal Reserve increasing interest rates by December more than doubled last week to 44 percent in the futures market.

The lira jumped 1.6 percent, after sliding 4.6 percent on Friday. The South African rand climbed 1.8 percent, having dropped 2.4 percent in the last session as news of Turkey’s coup attempt hit emerging-market assets. Mexico’s peso rose 0.6 percent.

Brazil’s real rose as increased confidence in the economy and favorable sentiment toward emerging-market assets overshadowed the central bank’s attempt to limit gains.

The yen fell 1.2 percent to a three-week low. The currency ended last week down 4.1 percent as Prime Minister Shinzo Abe outlined plans for a “bold” stimulus package in the wake of an election victory.

The pound gained 0.5 percent to $1.3263, extending last week’s advance. Bank of England policy maker Martin Weale said “firmer evidence” was needed on the impact of the U.K. leaving the EU before the bank changes policy.

Commodities

Crude oil fell 1.6 percent to settle at $45.24 a barrel in New York following the failed coup in Turkey last week as shipments continued through the vital conduit for oil from Russia and Iraq to the Mediterranean Sea. 

Gold futures climbed 0.2 percent to $1,329.70 an ounce, with this year’s advance at 25 percent. The metal is in a bull market and may surge to more than $1,500 as low interest rates buoy demand and the U.S. presidential election looms, according to DBS Group Holdings Ltd.

Nickel climbed to the highest in almost nine months amid supply disruptions in the Philippines, the biggest supplier of ore to China.

Bonds

Treasuries extended last week’s biggest decline in a year as the brightening U.S. economic outlook and political clarity in the U.K. helped sap demand for haven assets. The yield on 10-year notes rose three basis points to 1.58 percent, after jumping 19 basis points last week.

Turkish bonds fell, sending the 10-year yield up by 59 basis points to this month’s high of 9.66 percent. The rate on German notes due in a decade declined by two basis points to minus 0.02 percent. 

The European Central Bank published its corporate-bond holdings for the first time, showing it has bought debt from companies including foodmaker Danone SA, airline Deutsche Lufthansa AG and miner Glencore Plc under a program designed to spur economic growth.

Economists in a Bloomberg survey predict the ECB will keep policy unchanged after its meeting Thursday but announce fresh measures before the end of the year.