U.S. Stocks Climb Ahead of Central-Bank Meetings

Date : 06/17/2019 @ 10:14PM
Source : Dow Jones News

U.S. Stocks Climb Ahead of Central-Bank Meetings

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)

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


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