U.S. Stocks Fluctuate, Treasuries Rise on Powell: Markets Wrap

U.S. stocks fluctuated, Treasuries turned higher and the dollar rose as investors weighed an upbeat assessment of the economy from the Federal Reserve against fresh data showing uneven growth.

Chairman Jerome Powell’s testimony signaled optimism the economy is poised to pick up steam, while data on durable orders fell well short of estimates and the U.S. balance of trade worsened. The S&P 500 struggled for direction after a three-day rally, while Bloomberg’s dollar index pushed higher. The 10-year Treasury yield initially spiked on Powell’s seemingly hawkish tone, only to fall back to 2.85 percent.

  The pace of U.S. monetary policy tightening remains a hot debate on Wall Street and traders have been betting that Powell won’t seek to shock financial markets by moving toward more hawkish monetary policy. Fed Governor Randal Quarles made clear on Monday he thought a sustained period of higher growth might require higher interest rates.
 “The markets are skittish,” Barry James, president and portfolio manager at James Investment Research in Xenia, Ohio, said by phone. The testimony is “probably confirming what everybody already knew, so I don’t know if it’s that much of a surprise. People are maybe a little bit oversensitive right now.”
 Elsewhere, German bunds and U.K. gilts led a retreat in European bonds. Most industry groups in the Euro Stoxx 600 Index declined after Japan led Asian equities higher earlier. The won rose for a third day as the Bank of Korea left its benchmark interest rate unchanged. Oil slipped following a three-day rally as investors awaited U.S. inventory data. South Africa’s rand handed back recent gains amid a cabinet reshuffle.
Terminal users can read more in our markets blog.

Here are some key events scheduled for this week:

  • Powell testifies before a House panel on Tuesday. He’ll discuss the Fed’s Semi-Annual Monetary Policy Report and the state of the economy. Powell returns on March 1 before a Senate committee.
  • Companies announcing earnings this week include: Vale, Bayer and Lowe’s.
  • The European Union will publish a draft Brexit treaty on Wednesday and U.K. Prime Minister Theresa May delivers a speech Friday on Britain’s relationship with the European Union.
  • A barrage of data is expected out of Japan including retail sales and industrial production Wednesday, and capital spending Thursday.
  • In China, the official and Caixin purchasing managers’ indexes on Wednesday and Thursday respectively may show growth momentum slowed slightly in February, though the signal may be clouded by the holidays.

These are the main moves in markets:

Stocks

  • The S&P 500 fell less than 0.1 percent at 9:31 a.m. in New York.
  • The Nasdaq Composite Index slipped 0.1 percent.
  • The Stoxx Europe 600 Index slipped 0.1 percent.
  • The MSCI All-Country World Index declined.

Currencies

  • The Bloomberg Dollar Spot Index climbed 0.2 percent.
  • The euro declined 0.1 percent to $1.2288.
  • The Japanese yen fell 0.1 percent to 107.089 per dollar.
  • South Africa’s rand decreased 0.8 percent to 11.6482 per dollar, the biggest dip in almost three weeks.
  • The British pound dipped 0.3 percent to $1.3932.

Bonds

  • The yield on 10-year Treasuries advanced fell one basis point to 2.85 percent.
  • Germany’s 10-year yield gained two basis points to 0.67 percent, the first advance in a week and the biggest rise in more than a week.
  • Britain’s 10-year yield declined one basis point to 1.509 percent, reaching the lowest in four weeks on its sixth straight decline.

Commodities

  • West Texas Intermediate crude dipped 0.4 percent to $63.67 a barrel, the largest decrease in more than two weeks.
  • Gold fell 0.3 percent to $1,329.06 an ounce, the biggest fall in a week.
  • LME copper decreased 0.9 percent to $7,049.00 per metric ton, the lowest in two weeks.

Source: Bloomberg

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