Stocks Rally Amid Lull in Trade War as Tech Leads: Markets Wrap

(Bloomberg) -- Stocks rallied as trade tensions appeared to ease after China held off from immediately retaliating against the latest U.S. salvo. The dollar declined.

The S&P 500 Index closed at the highest level since February as China seemed to strike a conciliatory tone in reaction to President Donald Trump’s newest escalation of the trade war between the two countries. Technology shares led gains, sending the Nasdaq Composite Index to a record.

Ten-year Treasury yields traded little changed, and the dollar dropped against most peers after U.S. consumer prices rose less than forecast in June. West Texas crude fell to $70 a barrel.

While markets welcome the lull in the trade war, they’ll remain on edge as they await a potential reprisal from Beijing to Trump’s latest volley. Investors concerns had overshadowed economic data hinting that global growth is on track as well as the start of earnings season.

“What’s going on in the market right now is the tariffs are lending a tremendous amount of uncertainty,” Dave Haviland, managing partner of Beaumont Capital Management in Needham, Massachusetts, said by phone. “It’s the day-to-day back and forth, markets tend to overreact or react emotionally to news. This whole cauldron that is swirling around, all these worries and uncertainties are really causing this daily tug-of-war.”

Elsewhere, Turkey’s lira recovered from a record low. The won fell, with little reaction to the Bank of Korea holding its benchmark rate at 1.5 percent.

Terminal users can read more in Bloomberg’s Markets Live blog.

These are some events to look out for this week:

• Earnings season gets into gear with JPMorgan Chase & Co. and Citigroup Inc. among the largest companies due to give results, as well as India’s Infosys Ltd.
• Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.

And here are the main market moves:

Stocks

• The S&P 500 Index rose 0.9 percent to 2,798.34, the highest close since Feb. 1, 2018, as of 4 p.m. New York time.
• The Stoxx Europe 600 Index advanced 0.8 percent.
• The MSCI All-Country World Index gained 0.6 percent.
• The MSCI Emerging Market Index rose 0.5 percent.

Currencies

• The Bloomberg Dollar Spot Index declined 0.1 percent.
• The euro was little changed at $1.1677.
• The British pound was steady at $1.3209.
• The Japanese yen decreased 0.4 percent to 112.50 per dollar.

Bonds

• The yield on 10-year Treasuries were little changed at 2.85 percent.
• Germany’s 10-year yield dipped one basis point to 0.36 percent.
• Britain’s 10-year yield declined two basis points to 1.275 percent.

Commodities

• West Texas Intermediate crude fell 0.2 percent to $70.22 a barrel.
• Brent crude rose 1.1 percent at $74.20 a barrel.
• Copper gained 1.3 percent to $2.77 a pound.
• Gold increased 0.4 percent to $1,246.87 an ounce.

--With assistance from Samuel Potter.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

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

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