Stocks Close Higher as Growth Debated; Bonds Rise: Markets Wrap

(Bloomberg) -- Most U.S. stocks edged higher as the debate continued over whether better-than-forecast corporate earnings are enough to offset signs the economy may be cooling. Yields on benchmark Treasuries declined for a second day after reaching a more than four-year high.

“Signs of slowing global economic growth, rising interest rates, higher commodity prices and lingering trade uncertainty are all fueling concern profit margins may be peaking,” Alec Young, managing director of global markets research at FTSE Russell, said in an email.

After reporting strong results, tech giants including Microsoft, Intel and Amazon.com had a tough time holding on to all their gains. At its high of the day, the S&P 500 Information Technology Sector was up 1 percent, but by midday it dropped into the red before closing slightly higher. It’s a pattern that’s plagued this earnings season: Even though companies are beating earnings predictions at the fastest rate ever, stocks have remained relatively flat since JPMorgan kicked off reports.

The slew of first quarter growth figures are the latest clues on the health of the global economy, which is preoccupying investors amid growing signs of a peak in the cycle and against a backdrop of rising rates. The murky outlook is threatening to outweigh the impact of both a solid earnings season and easing geopolitical tension.

Yields on 10-year Treasuries dropped and the dollar declined from recent highs as the American economy slowed less-than-expected in the first quarter. The U.K. posted the worst quarterly GDP figures since 2012 and lackluster numbers also came out of France and Spain.

“Interest rates, the 10-year, is the biggest issue that kind of hangs over the market,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group LLC in Pittsburgh. “It can bring the party to an end -- and by party, I mean the actual economic activity on Main Street that is driving Wall Street right now.”

Elsewhere, crude oil held above the $68-a-barrel level as a geopolitical risk premium in the market limited losses. Prices have been supported by investors waiting to see whether the nuclear accord that Iran signed with world powers in 2015 will remain.

Terminal users can read more in our markets live blog.

And these are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.1 percent to 2,669.96 as of 4:03 p.m. New York time, while the Dow Jones Industrial Average dropped less than 0.1 percent to 24,311.32 and the Nasdaq Composite Index increased less than 0.1 percent to 7,119.80.
• The Stoxx Europe 600 Index rose 0.2 percent and the MSCI Asia Pacific Index gained 0.9 percent.
• The U.K.’s FTSE 100 Index gained 1.1 percent, the most in more than a week.
• The MSCI Emerging Market Index rose 1.2 percent.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2 percent.
• The euro gained 0.2 percent to $1.2131.
• The British pound fell 1 percent to $1.3782.
• The Japanese yen gained 0.2 percent to 109.07 per dollar.

Bonds

• The yield on 10-year Treasuries fell two basis points to 2.96 percent.
• Germany’s 10-year yield dipped two basis points to 0.57 percent.
• Britain’s 10-year yield fell six basis points to 1.44 percent.

Commodities

• West Texas Intermediate crude fell 0.2 percent to $68.08 a barrel.
• Gold rose 0.5 percent to $1,323.43 an ounce, the first increase in three days. 

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net, Janine Wolf in New York at jwolf71@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

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