Stocks Rise to Records as Dollar, Bond Yields Fall: Markets Wrap

(Bloomberg) -- U.S. stocks rebounded from the first retreat of the year to set fresh records, as resource producers and industrial shares rallied on optimism in the global economy. The dollar fell and Treasuries halted a decline.

The S&P 500 Index pushed its gain in 2018 to 3.5 percent, while small caps and tech shares rose to all-time highs. The Dow Jones Industrial Average also hit a record. The 10-year Treasury yield fell to 2.53 percent, while 30-year yields slumped after an auction. Bonds halted a slide sparked by rising concerns on inflation and the potential for fewer purchases by China. Oil was little changed after erasing a gain that took it to a three-year high. U.S. natural gas futures spiked higher.

The risk-on rally that greeted the new year resumed Thursday as American equities shook off some of the concerns that led to Wednesday’s declines. Data showing weaker wholesale prices tamped down concern that inflation would accelerate, though a key reading on consumer prices Friday will be closely watched. JPMorgan Chase & Co. and Wells Fargo & Co. will kick off the corporate earnings season Friday, with investors awaiting any commentary on the impact of U.S. tax reform on 2018 results. 

“Most of the dynamics that were in place late last year remain in place,” Burns McKinney, chief investment officer for Allianz Global Investors based in Dallas, said by phone. “What’s been driving the markets is that equities and investors have continued to price in the potential gains from tax reform... There’s still room for earnings forecasts to move upward.”

Here are some of the main events to watch for in the rest of the week:

• U.S. inflation data are forecast to show price pressures remain muted for now, giving hawks little reason to argue for faster tightening.
• JPMorgan and BlackRock Inc. are among four financial firms reporting results Friday.

Terminal users can read more in our markets blog.

And these are the main moves in markets:

Stocks

• The S&P 500 rose 0.7 percent to 2,767.55 at 4 p.m. in New York, for its seventh gain in eight days and a fresh record.
• The Russell 2000 Index climbed 1.7 percent for the biggest gain since September, while the Dow Jones Industrial Average added 0.8 percent. Both closed at records.
• The Stoxx Europe 600 Index fell 0.3 percent.
• The MSCI All-Country World Index added 0.4 percent.

Currencies

• The Bloomberg Dollar Spot Index fell 0.4 percent.
• The euro climbed 0.8 percent to $1.2045, the biggest increase since November.
• The British pound rose 0.2 percent to $1.3536.

Bonds

• The yield on 10-year Treasuries fell two basis points to 2.53 percent.
• The 30-year yield slid three basis points to 2.87 percent.
• Germany’s 10-year yield rose four basis points to 0.58 percent, the highest in almost six months.

Commodities

• The Bloomberg Commodity Index increased 0.1 percent for the third gain in a row.
• West Texas Intermediate crude was steady at $63.58 a barrel, while Brent fell 0.1 percent to $69.14 after briefly topping $70.
• LME copper gained 0.2 percent to $7,170.50 per metric ton, the highest in a week.
• Gold futures rose 0.2 percent to $1,322.20 an ounce, headed for the highest close since September.

--With assistance from Christopher Anstey and Eddie van der Walt

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net, Kailey Leinz in New York at kleinz1@bloomberg.net.

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

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