U.S. Tech Stocks Rally; Dollar Gains, Bonds Slide: Markets Wrap

(Bloomberg) -- U.S. technology shares led gains that sent benchmark equity indexes to fresh records, while hawkish comments from a Federal Reserve official boosted the dollar and Treasury yields.

The Nasdaq 100 Index jumped the most since November, as large-cap tech stocks rebounded from two weeks of declines, though not enough to recoup all of the losses that started June 9. The S&P 500 Index and Dow Jones Industrial Average ended at all-time highs. Treasuries fell after William Dudley said halting the tightening cycle now would imperil the economy. The dollar rose to the highest versus the yen since June 2, while gold slipped to a one-month low as haven demand ebbed.

In Asia, the focus is on the MSCI Inc. decision on whether to include China A shares in its global indexes; Hong Kong stocks surged in advance of Tuesday’s announcement. Oil continued to languish at about $45 per barrel as U.S. drillers continue to add rigs, blunting OPEC-led efforts to rebalance an oversupplied market.

The rebound in tech shares exemplified the risk-on mood among investors as the week began, with Apple Inc. leading a rebound in the some of the year’s highest fliers -- though the tech indexes remain about 2 percent below records achieved earlier this month. Commodities continued to slump, damping inflation expectations even as the Fed insists tighter policy remains appropriate. And a cloud of uncertainty remains over both U.K. leadership and the outlook for Brexit negotiations. 

“Risk assets around the world are rallying again as the ‘carry party’ resumes,” Societe Generale SA strategist Kit Juckes wrote in a client note. Fed Chair Janet Yellen “did nothing to persuade the market” to take its hawkish outlook for the path of interest rates seriously, he said.

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Here are some of the key upcoming events:

• Vice-Chair Stanley Fischer speaks tomorrow, as Fed speakers dominate the week. Then the list reads: Eric Rosengren, Robert Kaplan, Jerome Powell, James Bullard and Loretta Mester.
• MSCI announces whether it approved Chinese-listed stocks in its global benchmarks. The $6.8 trillion onshore market is the world’s second-largest and accounts for 9 percent of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts. MSCI’s decision is expected Tuesday after the close of U.S. markets.
• The International Paris Air Show is underway.

 
Here are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.8 percent to a record 2,453.25 as of 4 p.m. in New York. Tech shares in the measure jumped 1.7 percent while health-care shares added 1.1 percent.
• The Dow Jones Industrial Average also closed at an all-time high, adding more than 140 points to 21,527.
• The Nasdaq 100 jumped 1.6 percent, the most since Nov. 7. It’s still about 2 percent short of its best ever finish on June 8.
• Apple surged almost 3 percent, while chipmakers from Micron Technology Inc. to Advanced Micro Devices Inc. added more than 4 percent.
• Small caps in the Russell 2000 Index rose 0.8 percent. That index sits about 0.5 percent below its record set June 13.
• The Stoxx Europe 600 jumped 0.9 percent after falling 0.5 percent last week.

Currencies

• The Bloomberg Dollar Spot Index advanced 0.4 percent. The measure added to gains after Dudley said he is confident that the economic expansion has a way to run and that wage growth is likely to quicken, though inflation is lower than the Fed would like.
• The yen declined 0.7 percent to 111.595 per dollar.
• The pound fell 0.4 percent to $1.2732. The euro dropped 0.4 percent to $1.1153.

Bonds

• The yield on 10-year Treasuries rose four basis points to 2.19 percent.
• Argentina will test investor confidence by offering its first 100-year bond barely a year after finally settling a protracted legal dispute tied to a $95 billion default.
• U.K. 10-year yields rose one basis point to 1.03 percent; those in Germany increased less than one basis point to 0.28 percent.

Commodities

• West Texas Intermediate oil slipped 1.2 percent to settle at $44.20 a barrel. Crude has fallen four weeks straight as U.S. drillers continue to add rigs, blunting OPEC-led efforts to rebalance an oversupplied market.
• Gold futures slid 0.8 percent to settle at $1,246.70 an ounce, capping an eighth decline in nine sessions. The metal has fallen 4 percent since trading at a seven-month high on June 6.

--With assistance from Edward Bolingbroke and Samuel Potter

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net, Luzi Ann Javier in New York at ljavier@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Eric J. Weiner