Stocks Flirt With New High on Earnings, Trade Talk: Markets Wrap

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06 Nov 2019, 07:03 AM IST

Stocks Flirt With New High on Earnings, Trade Talk: Markets Wrap

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

(Bloomberg) -- U.S. equities hovered near record highs Tuesday before closing mostly lower as investors digested the latest earnings and economic data while awaiting more news about trade talks between America and China. Ten-year Treasury yields hit their highest since September, oil rose for a third day, and gold slipped below $1,500 an ounce.

The S&P 500 Index declined from Monday’s record, with financial and energy shares leading gainers, while health-care and real estate firms lagged. The Dow Jones Industrial Average rose to a fresh record. News that U.S. service industries expanded more than forecast in October triggered a brief equity rally but dimmed hopes for a December rate cut from the Federal Reserve. The Stoxx Europe 600 Index nudged higher.

Investors have been in a more bullish mood lately amid signs of progress in the trade war, which is alleviating one of the biggest headaches for markets as they approach year-end. Add in solid earnings and rebounding growth expectations, and a risk-on rotation has been taking hold. In the latest trade news, China is reviewing locations in the U.S. where President Xi Jinping would be willing to meet with President Donald Trump to sign a pact, people familiar with the plans said.

“There was some enthusiasm around the trade headlines and people are just taking a step back and remembering that that story-line is very hard to predict,” said Craig Birk, chief investment officer at Personal Capital, which oversees $10 billion. “There’s just as much risk as there is cause for optimism on the so called phase one deal attempting to be hammered out.”

Meanwhile, markets got further support after China’s central bank reduced the cost of one-year funds to banks for the first time since 2016, easing concerns about tightening liquidity. And Bank of Japan Governor Haruhiko Kuroda suggested his nation could issue more super-long term bonds, reflecting a desire for a steeper yield curve.

Japanese shares led gains as Tokyo traders caught up after a long weekend, with more modest advances in Shanghai, Hong Kong and Seoul. Australia’s dollar rose after its central bank left interest rates unchanged and said past easing steps are offering support.

Here are some key events coming up this week:

Earnings are due from companies including: SoftBank and BMW on Wednesday; Walt Disney, Toyota, Deutsche Telekom on Thursday.
Regional Federal Reserve presidents including Charles Evans, John Williams and Patrick Harker speak at events on Wednesday.
A Bank of England monetary decision is due Thursday.
The USDA World Agricultural Supply and Demand Estimates Report for November comes out Friday.

These are the main moves in markets:

Stocks

The S&P 500 Index fell 0.1% to 3,074.68 as of 4:02 p.m. New York time.

The Dow Jones Industrial Average jumped 0.1% to 27,492.43, the highest on record.

The Nasdaq Composite Index was little changed at 8,434.68.

The Stoxx Europe 600 Index increased 0.2% to 404.23, the highest in more than four years.

Germany’s DAX Index advanced 0.1% to 13,148.50, the highest in more than 17 months.

Currencies

The Bloomberg Dollar Spot Index rose 0.2% to the highest in almost three weeks.

Bonds

The yield on two-year Treasuries gained four basis points to 1.62%, the highest in a week on the largest gain in more than two weeks.

The yield on 10-year Treasuries advanced eight basis points to 1.85%, the highest in more than seven weeks.

Germany’s 10-year yield advanced four basis points to -0.31%, the highest in almost 16 weeks on the largest rise in almost four weeks.

Commodities

West Texas Intermediate crude advanced 1.1% to $57.16 a barrel, the highest in six weeks.

Gold depreciated 1.7% to $1,484.79 an ounce, the weakest in more than two weeks on the largest dip in almost six weeks.

--With assistance from Ishika Mookerjee, Abhishek Vishnoi, Andreea Papuc and Yakob Peterseil.

To contact the reporters on this story: Claire Ballentine in New York at cballentine@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, Andrew Dunn, Dave Liedtka