Bond Yields Drop on Bets Fed Nearing End of Hikes: Markets Wrap

Stocks rose and Treasury yields fell after data showing a slowdown in inflation bolstered speculation the Federal Reserve is nearing the end of its interest-rate hikes.

(Bloomberg) — Stocks rose and Treasury yields fell after data showing a slowdown in inflation bolstered speculation the Federal Reserve is nearing the end of its interest-rate hikes.

The S&P 500 climbed for a third straight day, while the tech-heavy Nasdaq 100 added about 1.5%. Two-year yields, which are more sensitive to imminent policy moves, tumbled 13 basis points to below 4.75%. The dollar retreated for a fourth straight session. Brent crude climbed above $80 a barrel for the first time since May.

Traders will also wade through remarks from a raft of Fed speakers on Wednesday, while the central bank will issue its Beige Book survey of regional business contacts at 2 p.m. in Washington.

Major banks will kick off the earnings season later this week, with JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. reporting results on Friday. The results from US banks are unlikely to provide clarity on areas of uncertainty, although there could be the first signs of a trough in net interest margin, Citigroup wrote in note downgrading JPMorgan to neutral.

For investors anxious the upcoming reporting season will put a dent on the recent stock rally, early tea leaves from S&P 500 firms offer some reassurance. Among the companies that issued forward guidance in June, the ratio of those whose forecast beat sell-side estimates exceeded misses by a multiple of two, according to data compiled by Bank of America Corp. That’s the highest reading since August 2021.

While profits from S&P 500 companies are projected to drop for a third straight quarter, earnings are expected to improve in the remainder of the year, with consensus calling for a small contraction in the third quarter and a return to profit growth in the fourth, Bloomberg Intelligence data show.

Key events this week:

China trade, Thursday
Eurozone industrial production, Thursday
US initial jobless claims, PPI, Thursday
US University of Michigan consumer sentiment, Friday
US banks kick off earnings, Friday

Some of the main move in markets:

Stocks

The S&P 500 rose 1% as of 11:08 a.m. New York time
The Nasdaq 100 rose 1.3%
The Dow Jones Industrial Average rose 0.8%
The Stoxx Europe 600 rose 1.5%
The MSCI World index rose 1.3%

Currencies

The Bloomberg Dollar Spot Index fell 0.9%
The euro rose 1% to $1.1115
The British pound rose 0.4% to $1.2991
The Japanese yen rose 1.4% to 138.46 per dollar

Cryptocurrencies

Bitcoin rose 0.7% to $30,779.13
Ether rose 1.2% to $1,896.63

Bonds

The yield on 10-year Treasuries declined nine basis points to 3.88%
Germany’s 10-year yield declined seven basis points to 2.58%
Britain’s 10-year yield declined 14 basis points to 4.52%

Commodities

West Texas Intermediate crude rose 1.4% to $75.87 a barrel
Gold futures rose 1.2% to $1,959.90 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Brett Miller, Tassia Sipahutar and Robert Brand.

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