U.S. Stocks Turn Positive After Fed Comments
July 18 2019 - 6:03PM
Dow Jones News
By Lauren Almeida and Akane Otani
U.S. stocks rose, erasing earlier declines, after a Federal
Reserve official said central banks must lower interest rates
swiftly on signs of economic weakening.
Stocks drifted lower for much of the trading day, then got a
lift after John Williams, president of the Federal Reserve Bank of
New York, said, "it pays to act quickly to lower rates at the first
sign of economic distress."
The comments from Mr. Williams, who is vice chairman of the
Fed's rate-setting Federal Open Market Committee, jolted markets,
sending Treasury yields and the dollar to session lows.
The two have recently drifted lower while stocks have climbed to
records as investors have bet that the Fed later this month will
make its first interest-rate cut since the end of the financial
crisis.
Mr. Williams didn't comment on the near-term outlook for U.S.
monetary or economic policy. But his remarks sent market
expectations for a half-percentage-point rate cut higher, with
federal-funds futures showing a 71% probability of such a cut in
July -- the highest in 2019, according to CME Group.
The Dow Jones Industrial Average rose 3.12 points, or less than
0.1%, to 27222.97. The S&P 500 gained 10.69 points, or 0.4%, to
2995.11 and the Nasdaq Composite added 22.04 points, or 0.3%, to
8207.24.
Earlier, corporate earnings drove swings in an otherwise quiet
trading day.
Netflix shed $37.23, or 10%, to $325.21 after the
video-streaming company said late Wednesday that the number of
subscribers in the U.S. declined for the first time in nearly a
decade.
Equipment-rental company United Rentals lost $10.38, or 7.9%, to
$121.11 after narrowing its full-year revenue outlook.
Other stocks fared better, with eBay rising 74 cents, or 1.9%,
to $39.77 after the online marketplace raised its profit outlook
and notched better-than-expected quarterly results.
Elsewhere, the Stoxx Europe 600 fell 0.2%, weighed down by
declines among shares of technology and oil-and-gas companies.
While the European economy is doing well, "it's more about
downside risk coming from trade wars combined with the everlasting
Brexit risk," said Jorge Garyao, global head of inflation strategy
at Société Générale.
The trade tensions that are focused on U.S.-China "could easily
move into the eurozone," he said.
In Asia, the Shanghai Composite Index fell 1%, notching its
third straight session of decline.
Progress toward a trade deal has stalled while the Trump
administration determines how to address Beijing's demands that it
eases restrictions on Huawei Technologies, people familiar with the
talks told The Wall Street Journal.
Republican senators also plan to introduce a bill that would
restrict Huawei from buying and selling U.S. patents, according to
draft text reviewed by The Wall Street Journal.
"Markets don't seem to be taking the comments on trade tensions
very well," said Fritz Louw, a currency analyst for Mitsubishi UFJ
Financial Group.
Japan's Nikkei Stock Average fell 2%, posting its biggest
one-day decline since March, after data showed exports tumbled for
the seventh straight month in June because of a sharp drop in
shipments of chip-making tools and automobile parts to China.
--Anna Isaac and Caitlin Ostroff contributed to this
article.
Write to Lauren Almeida at lauren.almeida@wsj.com and Akane
Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
July 18, 2019 17:48 ET (21:48 GMT)
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