Stocks moved in a tight range amid low volumes as investors assessed prospects for an economic recovery against the threat of faster inflation. Treasuries and the dollar also fluctuated. Trading in the S&P 500 was about 20% below the average of the past month. Companies tied to a broader reopening of the economy — such as energy, retail and financial shares — rose, while technology stocks underperformed. Fannie Mae and Freddie Mac tumbled after the U.S. Supreme Court dealt a blow to investors in their challenge to the government’s collection of more than $100 billion in profits from the government-sponsored enterprises.
Data Wednesday showed a measure of U.S. manufacturing activity expanded in June at the fastest pace in records dating back to 2007. Meantime, sales of new homes dropped unexpectedly last month as elevated home prices continued to weigh on affordability. The reports came a day after Federal Reserve Chair Jerome Powell reiterated his views that policy makers will be patient in waiting to lift borrowing costs despite the current inflation pressures.
The recent rally in Treasuries has helped bring their relationship with U.S. equities back to more traditional ground. One-month correlations between the Bloomberg Barclays U.S. Treasury Index and the S&P 500 Total Return Index have fallen back below zero. Stocks and bonds moving in lockstep create headaches for fund managers who use fixed-income securities to diversify their portfolios and protect them against a selloff in equities.
Bank of England interest rate decision ThursdayThe Fed releases Thursday the results of stress tests on the largest U.S. banksU.S. wholesale inventories, initial jobless claims, GDP, durable goods due ThursdayU.S. personal income/spending, University of Michigan sentiment on Friday
These are some of the main moves in financial markets:
Stocks
The S&P 500 was little changed as of 11:44 a.m. New York timeThe Nasdaq 100 rose 0.1%The Dow Jones Industrial Average was little changedThe Stoxx Europe 600 fell 0.7%The MSCI World index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%The euro was little changed at $1.1947The British pound rose 0.1% to $1.3969The Japanese yen fell 0.2% to 110.84 per dollar
Bonds
The yield on 10-year Treasuries advanced two basis points to 1.48%Germany’s 10-year yield declined one basis point to -0.18%Britain’s 10-year yield was little changed at 0.78%
Commodities
West Texas Intermediate crude rose 1% to $73.61 a barrelGold futures rose 0.6% to $1,787.90 an ounce
Source: FXPro