U.S. Stocks Climb Ahead of Central-Bank Meetings
17 June 2019 - 10:14PM
Dow Jones News
By Gunjan Banerji
U.S. stocks edged higher ahead of central bank policy meetings
around the world as investors continue to bet the Federal Reserve
will slash interest rates this year.
Investors have ramped up expectations of interest-rate cuts in
recent weeks. They will be watching the Fed meeting concluding
Wednesday for clues on how central bankers will proceed, which will
have wide-ranging implications across stock, bond and currency
markets. The Bank of Japan and Bank of England also meet this
week.
Monday's slim stock market advance built on two weeks of gains
by major U.S. stock indexes. U.S. stocks have rallied in June after
Fed Chairman Jerome Powell said the central bank would act to if
needed sustain U.S. economic expansion in the face of escalating
geopolitical and trade tensions.
Now, expectations that the Fed could reinforce that message this
week helped lift markets, analysts said. Many investors expect the
central bank to keep interest rates unchanged this month but cut
them later this year as soon as July, data from CME Group show.
"Investors are thinking that the Fed's going to come out with
some dovish language Wednesday," said Tracie McMillion, head of
global asset allocation at Wells Fargo Investment Institute. "That
would give markets maybe an additional boost."
The tech-heavy Nasdaq Composite gained 48.37 points, or 0.6% to
7845.02. The S&P 500 rose 2.69 points, or 0.1%, to 2889.67. The
Dow Jones Industrial Average added 22.92 points, or 0.1%, to
26112.53.
Investors turned to companies that tend to offer the prospect of
higher growth. Shares of Facebook jumped $7.68, or 4.2% to $189.01.
Netflix stock rose $10.89, or 3.2%, to 350.62. They also bought
shares of vegetarian food company Beyond Meat, sending its stock up
another $18.48, or 12% on Monday to a new high of $169.96.
However, Ms. McMillion said news from central bankers globally
could spur volatility in stock markets. Additionally, several
analysts warned that the Federal Reserve has a difficult task ahead
while crafting its message to market watchers.
"Our view on U.S. equities is more cautious. We're keeping a
close eye on the data, which has been deteriorating," said Greg
Boutle, U.S. head of equity and derivative strategy at BNP
Paribas.
On Monday, fresh data showed that a measure of U.S. home-builder
confidence slipped in June, a sign of languishing sentiment in an
important sector of the economy. Meanwhile, the Empire State
Manufacturing Survey's general business conditions index registered
its largest monthly decline on record. The New York Fed said 30% of
respondents reported business conditions that had worsened from a
month earlier.
"It's another signal that the Fed is going to have to take into
consideration," said Shawn Cruz, manager of trader strategy at TD
Ameritrade, of the data.
The yield on the 10-year Treasury note fell for the fifth
consecutive day as bond prices rose, the latest indication of how
difficult it has been for investors to size up the path of monetary
policy and ramifications of trade tensions between the U.S. and
China. Investors tend to turn to relatively safer assets like
government bonds when stocks are falling. But both stock and bond
prices rose in lockstep to start the week, continuing a recent
trend. The 10-year yield fell to 2.086% Monday from 2.093%
Friday.
Investors have also been watching for signs of how the U.S.
trade battle with China will ripple through the domestic economy.
The Office of the U.S. Trade Representative will be overseeing
public hearings this week on the Trump administration's proposal to
raise a levy on $300 billion of Chinese exports, including consumer
goods such as mobile phones and laptops.
In Europe, investors will focus on the European Central Bank's
annual forum in Portugal -- roughly equivalent to the Fed's Jackson
Hole Symposium While not an official monetary-policy meeting, the
ECB has previously used the forum to signal a shift in
approach.
Elsewhere, Hong Kong's Hang Seng gained 0.4% as authorities
indefinitely suspended debating a controversial extradition bill
that had sparked a wave of protests across the city. Global oil
benchmark Brent crude slipped 1.7% to $60.94 a barrel, snapping a
two-session winning streak.
Write to Gunjan Banerji at gunjan.banerji@wsj.com.
Nathan Allen contributed to this article
Write to Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
June 17, 2019 16:59 ET (20:59 GMT)
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