Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance
Find Stocks Now

Stocks edge up, yields dip on muted Fed hike expectations

Published 07/09/2016, 21:51
© Reuters. People walk through the lobby of the London Stock Exchange in London

By Chuck Mikolajczak

NEW YORK (Reuters) - A gauge of global equity markets reached its highest level in over a year on Wednesday and U.S. Treasury yields declined for a second straight session as expectations for a interest rate hike by the Federal Reserve remained muted.

According to the Fed's Beige Book report of anecdotal information collected from business contacts, the U.S. economy expanded modestly in July and August. But there was little sign that wage pressures were being felt beyond highly-skilled jobs, which the Fed is looking for to push inflation higher.

But comments from Richmond Fed President Jeffrey Lacker and Kansas City Federal Reserve President Esther George on Wednesday hinted that the possibility of a rate increase in September remained on the table.

The probability for a September rate hike inched up to 18 percent after the comments, from 15 percent in the prior session, according to CME's FedWatch tool, while expectations for a December increase nudged back above 50 percent.

A weaker-than-expected August employment report on Friday and Tuesday's soft services sector data have crimped expectations the Fed will boost rates when it meets next week and for the rest of the year.

"Follow-through from last week's OK-but-not-tremendous employment number is sending the lower-for-longer interest rate message out there to people ," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The Dow Jones industrial average (DJI) fell 12.4 points, or 0.07 percent, to 18,525.72, the S&P 500 (SPX) lost 0.34 points, or 0.02 percent, to 2,186.14 and the Nasdaq Composite (IXIC) added 8.02 points, or 0.15 percent, to 5,283.93.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

U.S. stocks were led lower by the consumer staples sector (SPLRCS), off 0.9 percent. General Mills (N:GIS) shares lost 4.3 percent to $67.85 after the company said its first-quarter organic net sales will be below its full-year guidance range.

European shares reversed early losses, with the FTSEurofirst 300 (FTEU3) closing up 0.3 percent. MSCI's all-country world index <.MWD00000PUS> edged up 0.09 percent after touching an intraday peak of 424.71, its highest level since August 2015.

Oil prices were positive in a volatile session, as the market focussed on the possibility that the world's top crude producers would agree on an output freeze. Brent futures (LCOc1) settled up 1.5 percent at $47.98 (35.9706 pounds) and U.S. crude ended up 1.5 percent at $45.50 a barrel.

The subdued expectations for a rate hike sent U.S. Treasury yields lower, with benchmark 10-year Treasury notes (US10YT=RR) up 2/32 in price to yield 1.5374 percent, from 1.543 percent on Tuesday. Yields fell as low as 1.519 percent, a three-week trough.

The dollar was last down 0.2 percent at 101.75 yen

But the dollar index (DXY), which measures the greenback against a basket of major currencies, edged up 0.18 percent to 94.994 after a drop of more than 1 percent on Tuesday.

(Additonal reporting by Caroline Valetkevitch; Editing by Nick Zieminski and Meredith Mazzilli)

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.