U.S. Stocks Climb Ahead of Central Bank Meetings

Date : 06/17/2019 @ 6:25PM
Source : Dow Jones News

U.S. Stocks Climb Ahead of Central Bank Meetings

By Gunjan Banerji and Nathan Allen 

U.S. stocks rose ahead of central bank policy meetings around the world as investors continue to bet the Federal Reserve will slash interest rates this year.

The tech-heavy Nasdaq Composite jumped 60 points, or 0.8%, lifted by shares of companies like Facebook and Netflix. The S&P 500 rose 5 points, or 0.2%. The Dow Jones Industrial Average added 0.2%.

Investors will be watching the Federal Reserve's meeting concluding Wednesday for clues on whether the central bank will slash rates this year, after ramping up expectations of an interest-rate cut in recent weeks. The Bank of Japan and the Bank of England also hold meetings this week.

Monday's moves 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 sustain U.S. economic expansion in the face of escalating geopolitical and trade tensions. Now, expectations that central bankers could send a similar message later this week helped lift markets, analysts said. Many expect the Fed to keep interest rates unchanged this month but cut them later this year, 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."

As a result, investors turned to companies that tend to offer the prospect of higher growth. Shares of Facebook and Netflix rose more than 3% apiece. Google parent Alphabet's stock gained 0.9%.

However, Ms. McMillion said news from central bankers globally could spur volatility in stock markets. Additionally, several analysts cautioned that the Federal Reserve has a difficult task ahead while crafting its message to market watchers.

Investors have also been watching for signs of how the U.S. trade battle with China will ripple over to the domestic economy. On Monday, the Office of the U.S. Trade Representative opened seven days of public hearings 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.

On Monday, new 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.

In Europe, investors will be focusing 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.

Shares of Deutsche Lufthansa dragged airline stocks lower in European trade. Lufthansa issued its second profit warning of the year, sending its shares down more than 10%. Ryanair Holdings, Air France-KLM and EasyJet all fell more than 3% amid concerns around overcapacity and deteriorating prices in the European short-haul market.

In Asia, 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 about 0.9% to $61.48 a barrel, following a rebound Friday.

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com


(END) Dow Jones Newswires

June 17, 2019 14:10 ET (18:10 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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