U.S. Stocks Struggle Near Record; Treasuries Rally: Markets Wrap

(Bloomberg) -- U.S. stocks struggled near record highs on speculation that a recent rally outpaced the risks to global economic growth. Bonds climbed.

The S&P 500 Index wiped out an early advance after Federal Reserve Chairman Jerome Powell said that uncertainties about the outlook remain -- including those around trade policy and the coronavirus. Meanwhile, Treasuries extended gains after he noted that the committee revised the language about inflation to clarify that policy makers aren’t comfortable with it below 2%.

“It seems like the markets are refocusing on the possibility that a cut is more likely than a hike, but we would’ve thought that would be equity positive,” said Sameer Samana, senior global market strategist for Wells Fargo Investment Institute. “It’s possible that there’s some profit-taking going on given the bounce-back.”

In a highly anticipated decision, the Fed kept its key rate unchanged and signaled policy would stay on hold. As the earnings season continued to roll in after the close, Microsoft Corp. reported sales and profit that topped analysts’ projections, while Tesla Inc.’s revenue exceeded estimates. Meantime, Facebook Inc.’s results underwhelmed investors.

Some other corporate highlights:

• Apple Inc.’s strong results sent the iPhone maker to a record.
• General Electric Co. soared after its cash outlook topped Wall Street’s estimates.
• Boeing Co. rallied on news the planemaker burned less cash than expected.
• McDonald’s Corp. rose as sales in its home market beat expectations.
• Mastercard Inc., Dow Inc. and T. Rowe Price Group Inc. reported better-than-estimated results.
• AT&T Inc. topped earnings estimates as cost cuts helped offset steep TV-subscriber losses and higher spending on its media business.
• EBay Inc., Advanced Micro Devices Inc. and Xilinx Inc. gave lackluster guidance.

Elsewhere, oil fell after a government report showed the biggest jump in U.S. crude stockpiles since November. The European Parliament approved Prime Minister Boris Johnson’s Brexit deal, clearing the way for the U.K. to leave the EU on Jan. 31 with an agreement that, for the time being, will avoid a chaotic rupture. The pound retreated.

Here are some events to watch out for this week:

• Samsung Electronics, International Paper, Unilever and Shell report on Thursday, followed by South Korean chip maker SK Hynix, Chevron, Caterpillar and Exxon Mobil all on Friday.
• The Bank of England meeting on Thursday is highly anticipated after a series of dovish comments raised speculation policy makers could lower interest rates.
• The U.S. reports fourth-quarter GDP Thursday.
• The U.K. is scheduled to leave the European Union Friday.

These are some of the main moves in markets:

Stocks

• The S&P 500 fell 0.1% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index increased 0.4%.
• The MSCI Emerging Market Index lost 0.4%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro dipped 0.2% to $1.1005.
• The Japanese yen strengthened 0.1% to 109.09 per dollar.

Bonds

• The yield on 10-year Treasuries dipped eight basis points to 1.58%.
• Germany’s 10-year yield fell four basis points to -0.38%.
• Britain’s 10-year yield decreased four basis points to 0.516%.

Commodities

• The Bloomberg Commodity Index slid 0.6%.
• West Texas Intermediate crude fell to $53.33 a barrel.

--With assistance from Andreea Papuc, Adam Haigh, Robert Brand, Todd White, David Wilson, Sarah Ponczek, Sophie Caronello and Vildana Hajric.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net;Katherine Greifeld in New York at kgreifeld@bloomberg.net

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

©2020 Bloomberg L.P.