Stocks Gain as Investors Shrug Off Trade Concerns: Markets Wrap

(Bloomberg) -- U.S. stocks reversed early losses to trade higher on light volume Monday as investors looked past potentially rising global trade tensions to focus on tech strength. The dollar climbed, roiling emerging markets, while oil drifted lower as President Donald Trump called for Saudi Arabia to increase petroleum production in order to reduce prices.

The S&P 500 Index rose as information technology companies and utilities offset weakness in energy, while the Nasdaq indexes also climbed. With U.S. trading desks thinly staffed ahead of the July 4 holiday, volume in S&P 500 stocks was about 17 percent below average and activity in Nasdaq shares was 22 percent less than normal. The euro pared losses after reports that the German Interior Minister said he’d resolved a coalition clash with Chancellor Angela Merkel.

Treasuries fell slightly. Commodities had their biggest tumble since 2016, led by weakness in metals, as silver dropped almost 2 percent and gold declined 1 percent.

“You throw in all the tariffs, which tariffs are impossible to model, literally, and that’s why you’re just going to see a back and forth I think for the remainder of the year,” Jason Barsema, president and co-founder of Halo Investing, said by phone. “This trade war, and it is a war, I think we’ve gotten ourselves into a little bit of a pickle.”

Emerging-market stocks retreated and their currencies fell as well. Mexico’s peso dipped following the country’s presidential elections. In China, weaker-than-expected manufacturing data for June added to concern that the country’s growth is softening.The MSCI Asia Pacific Index sank to its lowest level since in 10 months. The yuan softened, resuming its sharpest drop since China’s August 2015 devaluation.

Trade-war jitters, political risk in Europe and divergence in monetary policy across the globe remain some of the key issues worrying investors. Britain’s pound declined in yet another big week for Brexit.

“Trade and tariff tensions continued to weigh on global equities as well as emerging market currencies,” John Stoltzfus, the chief investment strategist at Oppenheimer & Co., wrote in a note to clients Monday. “This is likely to persist particularly as the July 6 deadline looms for the Trump Administration’s planned imposition of tariffs.”

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

These are key events coming up this week:

• The Reserve Bank of Australia has a policy decision Tuesday.
• The U.S. celebrates Independence Day on Wednesday, July 4. Stock and bond markets are closed, along with government offices.
• Federal Reserve releases minutes of its June 12-13 meeting, when FOMC policy makers raised the benchmark rate a quarter point for the second time this year and lifted the median forecast to four total increases in 2018.
• U.S. payrolls are due Friday.
• Also on Friday, the U.S. is scheduled to impose tariffs on $34 billion of Chinese goods. Beijing has said it will slap tariffs on an equal value on U.S. exports including agricultural and auto exports.

Here are the main market moves:

Stocks

• The S&P 500 gained 0.3 percent to 2,726.71, while the Nasdaq 100 Index rose 0.8 percent.
• The Stoxx Europe 600 Index fell 0.8 percent, climbing back from an earlier 1.2 percent decline.
• The MSCI All-Country World Index dropped 0.4 percent.
• The MSCI Emerging Market Index decreased 1 percent.

Currencies

• The Bloomberg Dollar Spot Index increased 0.5 percent.
• The euro declined 0.6 percent to $1.1619.
• The British pound fell 0.6 percent to $1.3129.

Bonds

• The yield on 10-year Treasuries added less than one basis point to 2.8656 percent.
• Germany’s 10-year yield was little changed at 0.304 percent.
• Britain’s 10-year yield decreased two basis points to 1.255 percent.

Commodities

• The Bloomberg Commodity Index declined 1.9 percent, the largest fall since November 2016.
• West Texas Intermediate crude fell 0.3 percent to $73.93 a barrel.
• Gold dipped 0.9 percent to $1,241.05 an ounce.

--With assistance from Ksenia Galouchko and Eddie van der Walt.

To contact the reporter on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Eric J. Weiner

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