U.S. Stocks Win Short Reprieve From Dovish Fed: Markets Wrap

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U.S. equities enjoyed a brief recovery, before fading again, after the Federal Reserve signaled it won’t raise rates this year, saying economic growth has slowed. Ten-year Treasury yields headed to their lowest in over a year and the dollar fell.

The dovish tone of Wednesday’s Fed announcement unleashed a rally that saw technology shares surge and energy stocks add to gains, lifting the S&P 500 Index out of a session-long funk and pushing the Nasdaq 100 to its highest level since October. But toward the end of regular trading, weakness in the financial and health-care sectors pulled the S&P back down.

At his press conference, Fed Chairman Jerome Powell emphasized patience and said the central bank’s next move could be either or a rate increase or a cut.

“There was a lot of anticipation that the Fed was going to validate in this meeting the dovish pivot they put into place in January, and I think that’s what they’ve delivered here,” Jeffrey Rosenberg, BlackRock systematic fixed-income senior portfolio manager, said on Bloomberg Television.

In Europe, a raft of negative corporate news dragged down the Stoxx Europe 600 Index. Germany’s DAX Index led the retreat as BMW AG warned earnings would fall and chemical maker Bayer AG headed for the biggest drop in 15 years after losing the first phase of a U.S. trial over claims its weed killer caused cancer. In Asia, Japanese shares finished higher, while most other markets dipped.

The pound fell as U.K. Prime Minister Theresa May sought to extend the Brexit deadline, while the opposition called for the public to have the final say over the country’s EU exit. The euro gained after German producer prices missed estimates. European sovereign bonds gained.

Gold gained. West Texas crude spiked after an unexpected drop in U.S. oil inventories.

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Here are some key events coming up this week:

  • Company earnings this week include Tencent, Hermes, Tiffany, Micron, Nike and PetroChina.
  • Central banks in the U.K., the Philippines and Indonesia are all scheduled for policy meetings.
  • Euro-zone purchasing manager survey numbers on Friday will give an indication of the health of the region’s industrial and service sectors.

And these are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.2 percent as of 3:38 p.m. New York time.
  • The Stoxx Europe 600 Index declined 0.9 percent.
  • The U.K.’s FTSE 100 Index fell 0.5 percent.
  • The DAX Index sank 1.6 percent, its biggest tumble in almost six weeks.
  • The MSCI Emerging Market Index gained 0.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.5 percent to a six-week low.
  • The euro advanced 0.7 percent to $1.1435, the strongest in over six weeks.
  • The British pound sank 0.4 percent to $1.3212.
  • The Japanese yen climbed 0.7 percent to 110.62 per dollar.

Bonds

  • The yield on 10-year Treasuries decreased eight basis points to 2.54 percent, a 14-month low.
  • Germany’s 10-year yield declined one basis point to 0.08 percent.
  • Britain’s 10-year yield dipped three basis points to 1.157 percent.

Commodities

  • West Texas Intermediate crude gained 1.4 percent to $59.83 a barrel, a four-month high.
  • Gold rose 0.6 percent to $1,314.20 an ounce.

–With assistance from Adam Haigh, Charlotte Ryan, Eddie van der Walt, Luke Kawa and Reade Pickert.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@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

©2019 Bloomberg L.P.

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