U.S. Stocks Rise While Dollar Drops With Bonds: Markets Wrap

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Aug 11 2020, 3:37 AMAug 11 2020, 9:49 PMAugust 11 2020, 3:37 AMAugust 11 2020, 9:49 PM

(Bloomberg) -- U.S. stocks climbed toward all-time highs, Treasury yields rose and the dollar weakened as investors embraced risk. Gold headed for its biggest decline in seven years.

The benchmark S&P 500 posted an eighth straight gain, led by energy, financial and industrial shares. The tech heavy Nasdaq 100 fell for a third day. President Donald Trump said Monday he’s considering a tax cut on capital gains and American hospitalizations for Covid-19 fell to their lowest in a month.

“It seems like a market in the final stages of a rally where investors try and play catch up in the highest beta/most cyclical areas, such as small caps, energy, financials, industrials,” said Sameer Samana, Wells Fargo Investment’s senior global market strategist. “It is a risk-on market, but with a slightly different flavor than the one we saw while real rates and the dollar were declining.”

A broad rally from industrial goods to health-care shares sent the Stoxx Europe 600 Index to its best increase in a week.

Treasuries and European bonds extended their declines. The dollar turned lower against its major peers including the euro, after a German gauge of investor confidence unexpectedly surged. Gold fell for a third day.

Investors in risk assets are taking some comfort from Trump’s comment on potential tax cuts, strong Chinese economic data and falling hospitalizations in California and New York. They’re driving an MSCI global stocks benchmark toward erasing its 2020 loss today.

“There’s some profit taking going on, they’re looking to rotate into some of the stuff that hasn’t performed as well,” said Keith Gangl, portfolio manager for Gradient Investments. “The last few days, it’s been the fact that the data about the coronavirus has been better.”

Elsewhere, the resignation of Lebanon’s government after the devastating explosion in Beirut threatened to upend prospects of a debt restructuring deal in the next few months.

Here are some key events coming up:

Earnings include E.ON, Deutsche Telekom, Carlsberg, Tencent and JD.com.
New Zealand’s central-bank policy decision is due on Wednesday.
U.S. CPI for July is scheduled for Wednesday.
China releases a slew of data for July on Friday, including industrial production and retail sales.

These are the main moves in markets:

Stocks

The S&P 500 Index increased 0.4% to 3,373.98 as of 12:14 p.m. New York time, hitting the highest in almost six months with its eighth consecutive advance.

The Dow Jones Industrial Average rose 1% to 28,052.08, reaching the highest in almost six months on its eighth consecutive advance.

The Nasdaq Composite Index decreased 0.1% to 10,958.96.

The MSCI All-Country World Index gained 0.7% to 568.34, the highest in almost six months.

Currencies

The Bloomberg Dollar Spot Index decreased 0.1% to 1,179.24.

The euro increased 0.2% to $1.1765.

The Japanese yen depreciated 0.6% to 106.54 per dollar, the weakest in more than two weeks on the largest fall in more than a week.

Bonds

The yield on 10-year Treasuries gained seven basis points to 0.64%, the highest in a month on the biggest climb in more than two months.

Germany’s 10-year yield gained five basis points to -0.48%, the highest in more than two weeks on the largest rise in almost six weeks.

Britain’s 10-year yield climbed seven basis points to 0.2%, the highest in five weeks on the biggest increase in more than four months.

Commodities

West Texas Intermediate crude increased 0.6% to $42.17 a barrel.

Gold depreciated 4% to $1,946.05 an ounce, the weakest in two weeks on the biggest tumble in more than seven years.

Copper climbed 0.4% to $2.87 a pound.