Banks Lead U.S. Stocks Higher With Yields Climbing: Markets Wrap
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Banks Lead U.S. Stocks Higher With Yields Climbing: Markets Wrap

U.S. stocks rose as banks rallied on a jump in Treasury yields jumped, while lawmakers in Washington continue to haggle over a spending bill.

The S&P 500 pared its weekly decline as financial firms rallied almost 2%. The 10-year Treasury yield popped to 0.84%, its highest since June. Energy producers also surged, rebounding with oil from a prior-day selloff. Small caps rose 1.5%.

Investors remained fixated on Washington, where lawmakers continue to work toward a package to bolster the economy. While House speaker Nancy Pelosi signaled optimism on a deal with the administration, opposition remains in the Republican-controlled Senate, making a pact before the election less likely.

Tech shares underperformed. AT&T Inc. rallied after the phone giant added more wireless subscribers than analysts estimated. Data showed a drop in jobless claims, suggesting the labor market is still gradually recovering.

“Earnings are heating up and they are generally coming in healthy and better than expected. But with the stimulus saga dragging on and the election looming, macro influences will continue to dominate market internals until there’s some clarity,” Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote in a note.

Banks Lead U.S. Stocks Higher With Yields Climbing: Markets Wrap

In Europe, the Stoxx Europe 600 Index was lower. Luxury handbags and scarves house Hermes International rose after surpassing analysts’ sales estimates on a rebound in demand from Asia. The MSCI Asia Pacific Index slid. Gold declined, and copper slipped after topping $7,000 a ton for the first time in more than two years.

With no meaningful progress on fiscal policy, markets “are reacting to the heightened political instability that comes with the confirmation of efforts to manipulate the presidential race,” said Eleanor Creagh, a Sydney-based strategist at Saxo Capital Markets. “The ability for either candidate to seize upon accusations of foreign interference is heightened and raises the probability of a contested outcome, particularly as the race could be closer than polls currently indicate.”

Around the world, there is also increasing evidence that the pandemic is worsening. German infections have jumped to a record and Spain’s heath minister said the spread of coronavirus is out of control in certain parts of the country. U.S. hospitalizations for Covid-19 have reached a two-month high.

Here are some key events coming up:

  • The final presidential debate before the U.S. election, between President Donald Trump and former Vice President Joe Biden, will be live from Nashville, Tennessee on Thursday.
Banks Lead U.S. Stocks Higher With Yields Climbing: Markets Wrap

These are some of the main market moves:

Stocks

  • The S&P 500 Index rose 0.5% as of 4 p.m. New York time.
  • The Nasdaq 100 ended lower by 0.02%.
  • The Stoxx Europe 600 Index dropped 0.2%.
  • The MSCI Asia Pacific Index decreased 0.8%.
  • The MSCI Emerging Market Index fell 0.4%.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.2%.
  • The euro fell 0.3% to $1.1822.
  • The British pound decreased 0.4% to $1.3093.
  • The Japanese yen weakened 0.2% to 104.83 per dollar.

Bonds

  • The yield on 10-year Treasuries added two basis points to 0.84%.
  • The two year rate added one basis point to 0.15%
  • Germany’s 10-year yield rose one basis point to -0.58%.
  • Britain’s 10-year yield climbed three basis points to 0.27%.

Commodities

  • West Texas Intermediate crude increased 1.4% to $40.60 a barrel.
  • Gold futures weakened 1.4% to $1,902.20 an ounce.

©2020 Bloomberg L.P.

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