The rally in stocks regained traction as speculation that the Federal Reserve will tighten policy at a gradual pace outweighed concern about the central bank’s hawkish pivot. Treasuries dropped.
A relative sense of calm returned to markets, with risk assets rebounding after last week’s selloff and a jittery session in Asia. Energy, financial and industrial stocks drove gains in the S&P 500, while high-flying tech companies underperformed. A gauge of small caps climbed about 2%. Amazon.com Inc. fell as the online retail giant kicked off its Prime Day sale, with merchants curbing discounts amid rising shipping costs. Bitcoin sank as China intensified its cryptocurrency crackdown.
Traders remained focused on appearances by Fed officials for guidance on their massive bond-buying program. Dallas Fed President Robert Kaplan said he favors starting the process of reducing the central bank’s ongoing purchases “sooner rather than later,” while his counterpart from St. Louis James Bullard called it “appropriate” that policy makers last week opened the taper debate.
Fed Chair Jerome Powell testifies at a House Subcommittee hearing on the Fed’s pandemic emergency lending and its asset purchase programs TuesdayBank of England interest rate decision Thursday
The S&P 500 rose 1.3% as of 2:27 p.m. New York timeThe Nasdaq 100 rose 0.7%The Dow Jones Industrial Average rose 1.7%The MSCI World index rose 0.7%
The Bloomberg Dollar Spot Index fell 0.4%The euro rose 0.4% to $1.1912The British pound rose 0.9% to $1.3931The Japanese yen was little changed at 110.26 per dollar
The yield on 10-year Treasuries advanced four basis points to 1.48%Germany’s 10-year yield advanced three basis points to -0.17%Britain’s 10-year yield advanced two basis points to 0.77%
West Texas Intermediate crude rose 2.5% to $73.44 a barrelGold futures rose 0.8% to $1,783.70 an ounce