U.S. Stocks Push to Records as Oil, Dollar Climb: Markets Wrap

  • Dollar strengthens, Treasuries dip after wholesale price data
  • Energy shares lead gains as oil rallies on demand outlook

Citigroup's Buiter Says There's Froth in Markets

U.S. stocks edged higher and the dollar gained for a third day as investors assessed the latest readings on inflation for clues on the Federal Reserve’s next policy move.

The S&P 500 Index eked out a gain to end at a record after fluctuating for most of the day. The Dow Jones Industrial Average also closed at a fresh high. Energy shares paced gains as crude surged to a five-week high on a forecast for higher demand. Treasuries retreated.

The bull run in equities is provoking concern in some corners of the market, with the number of investors seeking protection from a possible plunge jumping. Leon Cooperman, the billionaire founder of hedge fund Omega Advisors, says a correction could start “very soon.” The reduction of bond purchases by central banks in coming months will put pressure on riskier assets including high-yield bonds and equities, according to Citigroup Inc.

“Central banks will tread carefully and the direct impact of global tapering on the real economy will likely be modest,” Citigroup economists led by Ebrahim Rahbari wrote in a report. “But there is a material risk in our view that major asset price corrections could be triggered by this global tapering.”

Bob Doll, chief equity strategist at Nuveen Asset Management, discusses equities and the search for yield.

Source: Bloomberg

Renewed hope for a U.S. tax overhaul also bolstered the dollar Wednesday, sending it to the longest winning streak in more than a month. Trump administration officials and congressional Republican leaders are promising a new framework in two weeks for the legislation. They’ve shied away from releasing any details about how the changes would affect individuals or corporations.

Terminal subscribers can read more in our Markets Live blog.

Among the key events this week for markets:

  • U.S. consumer-price data on Thursday will be watched by investors for clues on the Fed’s policy-tightening path.
  • The Bank of England will almost certainly leave policy unchanged Thursday.
  • Also scheduled this week is data on China’s August industrial production, retail sales and fixed-asset investment.
  • Australia releases jobs numbers on Thursday.

Here are the main moves in markets:

Stocks

  • The S&P 500 Index rose 0.1 percent to close at 2,498.31. 
  • The Stoxx Europe 600 Index closed little changed.
  • The MSCI All-Country World Index slipped 0.2 percent. 
  • The MSCI Emerging Market Index declined 0.3 percent. 

Currencies

  • The Bloomberg Dollar Spot Index rose 0.4 percent. 
  • The euro fell 0.7 percent to $1.1882. 
  • The British pound weakened 0.6 percent to $1.3201.
  • The Japanese yen slipped 0.4 percent to 110.62 per dollar, a one-month low.

Bonds

  • The yield on 10-year Treasuries rose three basis points to 2.2 percent. 
  • Germany’s 10-year yield was little changed at 0.4 percent. 
  • Britain’s 10-year yield rose one basis point to 1.14 percent.

Commodities

  • Gold fell 0.4 percent to settle at $1,328 an ounce. 
  • West Texas Intermediate crude increased 2.2 percent to settle at $49.30 a barrel. 
  • Copper declined 1.7 percent to $2.9835 a pound, the lowest in more than three weeks.

— With assistance by Adam Haigh, Andreea Papuc, Lu Wang, and Robert Brand

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