U.S. Stocks Rise With Dollar on Fed Economy Views: Markets Wrap

(Bloomberg) -- Most U.S. stocks advanced and the dollar rose after the Federal Reserve acknowledged economic growth is solid. Small caps fell as the prospects for tax reform remained uncertain amid political wrangling in Congress.

The S&P 500 Index edged higher after the Fed reinforced expectations for a December rate increase by subtly upgrading its assessment of the economy. Treasuries maintained their advance, while the dollar budged little after the Wall Street Journal reported President Donald Trump has selected Federal Reserve Governor Jerome Powell to lead the Fed.

The Fed meeting did little to alter perceptions, with investors focused on the prospects for tax cuts, corporate earnings and Friday’s U.S. jobs report. The Russell 2000 Index took a hit on speculation that failure to cut taxes would weigh on small companies hardest. Facebook Inc. added more than 2 percent in late trading after its results topped estimates. Apple Inc. is due to report Thursday.

Earlier, European equities hit a two-year high and share measures from Tokyo to Sydney climbed as corporate earnings poured in ahead of expectations. Nickel surged to the highest since 2015 on speculation demand will grow, while oil slumped from an eight-month high following a U.S. inventories report.

U.S. equity markets continue to show sensitivity to the tax plan as its prospects ebb and wax from headline to headline. Congress intended to release details Wednesday but delayed that until at least tomorrow as legislators debate how to pay for big reductions. Trump has insisted that the legislation be passed before Thanksgiving. The back-and-forth threatened to overshadow a raft of strong corporate earnings and sales that had bolstered optimism in the global economy.

“The market is pounding the table asking, ‘Where is this plan, why have I not seen it yet, the calendar is getting short,”’ said Michael Antonelli, managing director of institutional equity trading at Robert W Baird. “The Russell 2000 has been going lower every second of the day so far.”

Meanwhile, central banks remain on the docket. An announcement on who will helm the Fed is due Thursday, with current board member Jerome Powell said to have the edge over John Taylor. The Bank of England will probably lift borrowing costs on for the first time in a decade.

There were few developments of note in the unfolding investigation by Special Counsel Robert Mueller into Russia’s meddling in last year’s presidential campaign.

Terminal users can read more in our Markets Live blog.

Here are some other key upcoming events this week:

• The U.S. October payroll report comes out Friday.
• Trump starts an 11-day trip to Asia, his first as president, on Friday. Trade and security issues -- particularly North Korea -- will probably be in focus.
• A probable Bank of England rate hike on Thursday will be the first in a decade.
• The slew of earnings releases will culminate with Apple Inc. results.

And these are the main moves in markets:

Stocks

• The S&P 500 rose 0.2 percent to 2,579.37 at the close in New York.
• The Dow Jones Industrial Average added 0.3 percent and the Russell 2000 lost 0.7 percent.
• The Stoxx Europe 600 Index advanced 0.4 percent.
• Japan’s Nikkei 225 Stock Average climbed 1.9 percent to the highest in more than 21 years.
• The MSCI Asia Pacific Index climbed 0.9 percent to the highest in about 10 years.
• The MSCI Emerging Market Index jumped 0.9 percent to the highest in more than two weeks.

Currencies

• The Bloomberg Dollar Spot Index advanced 0.1 percent.
• The euro fell 0.3 percent to $1.1615.
• The British pound increased less than 0.05 percent to $1.3288, the strongest in more than a month.
• The Japanese yen decreased 0.5 percent to 114.20 per dollar, the weakest in about six months.

Bonds

• The yield on 10-year Treasuries fell one basis points to 2.37 percent.
• Germany’s 10-year yield advanced two basis points to 0.38 percent.
• Japan’s 10-year yield declined one basis point to 0.061 percent, the lowest in more than three weeks.

Commodities

• West Texas Intermediate crude slipped 0.3 percent to $54.23 a barrel, after touching the highest in eight months.
• Gold futures increased 0.4 percent to $1,276 an ounce.
• Copper advanced 1.6 percent to $3.15 a pound.

--With assistance from Andreea Papuc Robert Brand and Elena Popina

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net, Sarah Ponczek in New York at sponczek2@bloomberg.net.

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

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