Stocks Post Best Week of 2019 on ‘Fed Put’ Wagers: Markets Wrap

(Bloomberg) -- U.S. stocks rallied for a fourth day after weak jobs data added to bets the Federal Reserve will cut rates. Treasury yields and the dollar fell.

The S&P 500 Index had its best week since November on speculation the Fed will move to shore up the economy as a report showed employers added the fewest workers in three months and wage gains cooled. Technology shares led the advance in equities, while banks sank. The 10-year bond yield extended its weekly slide. The peso rose after President Donald Trump said there’s a “good chance” the U.S. will reach a deal to avert imposing trade tariffs on Mexico.

Read: Bond Traders See Little on Radar to Derail Fed Rate-Cut Bets

Traders have aggressively increased bets the Fed will cut rates after a string of weak reports on retail sales, factory orders and home purchases indicated the world’s largest economy is slowing. Earlier in the week, Chairman Jerome Powell signaled he’s open to easier policy amid trade tension. Fed funds futures show a quarter-point cut almost fully priced in for July.

“The days of the ‘Fed Put’ are back, with investors treating bad economic data as good news for stocks,” said Chris Gaffney, president of world markets at TIAA Bank. “The numbers weren’t necessarily bad enough to force a move by the FOMC later this month, but I expect Chairman Powell to continue to sound a more dovish tone. Chances of a rate cut by year-end have increased.”

On the trade front, the Trump administration said that some Chinese products exported to the U.S. won’t be subject to a tariff increase until June 15. The offshore yuan fell to its weakest since November before paring losses as China’s central bank governor said there’s “tremendous” room to adjust monetary policy if the trade war deepens.

In company news, Microsoft Corp. climbed back above the coveted $1 trillion level in market value amid a broader rally in technology shares. Beyond Meat Inc. soared to a record after the faux-meat maker’s sales forecast beat estimates. Online fashion retailer Revolve Group Inc. jumped in its trading debut after raising $212 million in an IPO.

Here are some notable events coming up:

• Finance ministers and central bank governors from the G-20 nations gather in Fukuoka, Japan this weekend.

These are some of the main moves in markets:

Stocks

• The S&P 500 Index climbed 1.1% to 2,873.34 as of 4 p.m. New York time, the highest in more than three weeks.
• The Stoxx Europe 600 Index gained 0.9%.
• The MSCI Asia Pacific Index added 0.4%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%.
• The euro climbed 0.5% to $1.1334.
• The Japanese yen rose 0.2% to 108.16 per dollar.

Bonds

• The yield on 10-year Treasuries decreased four basis points to 2.08%.
• Germany’s 10-year yield fell two basis points to -0.26%.
• Britain’s 10-year yield declined one basis point to 0.813%.

Commodities

• The Bloomberg Commodity Index rose 0.1%.
• West Texas Intermediate crude jumped 2.7% to $53.99 a barrel.

--With assistance from Cormac Mullen, Adam Haigh, Namitha Jagadeesh, Yakob Peterseil, Sophie Caronello, Andrew Cinko, Sarah Ponczek and Benjamin Purvis.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

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

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