LDN - Business

Stocks extend gains after sell-off amid positive data, Fed's rate signals

[August 10, 2024] By Sinéad Carew and Chibuike Oguh

NEW YORK (Reuters) -The closely watched global equities index advanced on Friday, ending a volatile week unchanged after starting it with a massive sell-off, while the dollar slipped slightly and oil prices ended higher on supply concerns over the Middle East conflict.

A trio of Federal Reserve policymakers had indicated Thursday that they were more confident that inflation is cooling enough to cut rates. Their comments - along with a bigger-than-expected fall in U.S. jobless claims data - had helped to reassure investors enough to underpin the stock market recovery.

On Wall Street, the three main indexes closed higher after a choppy morning. All three had tumbled on Monday, when the S&P 500 lost 3% amid a global sell-off that started in Japan as investors unwound a popular trade and worried about the prospects for a U.S. recession.

With Friday's lack of new economic catalysts, Robert Phipps, director at Per Stirling Capital Management in Austin, Texas, said investors focused on hopes the S&P 500 would surpass its recent trading range of 5135 to 5346.

"We finished at the top of the range but were unable to break out of it,” said Phipps, noting that this likely indicated that investors were still trying to make their mind up about the U.S. economy. "This was a relief rally, not where things were good but they were not as bad as expected. There wasn't a substantial enough economic data set during the week to break us out of the trading range."

On top of economic concerns, Phipps pointed to fears "the Middle East might still erupt into a broader conflict over the weekend when markets are closed and unable to react."

Investors will look for fresh evidence on the chances of a soft landing for the American economy in next week's readings on the consumer prices and retail sales for July.

But in a sign of relative calm on Friday, the CBOE volatility index index, known as Wall Street's 'fear gauge,' fell 3.42 points to close at 20.37, in a far cry from its intraday spike on Monday to 65.73.

On Wall Street, the Dow Jones Industrial Average rose 51.05 points, or 0.13%, to 39,497.54, the S&P 500 gained 24.85 points, or 0.47%, to 5,344.16 and the Nasdaq Composite gained 85.28 points, or 0.51%, to 16,745.30.

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Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 24, 2024. REUTERS/Brendan McDermid/File Photo

But for the week, the S&P 500 fell 0.04%, the Nasdaq declined 0.18%, and the Dow shed 0.6%.

Meanwhile, MSCI's gauge of stocks across the globe rose 5.39 points, or 0.69%, to 787.16 but was virtually unchanged for the week, down 0.01%.

Earlier, Europe's STOXX 600 index closed up 0.57%.

In Asia, Japan's Nikkei stocks benchmark closed 0.56% higher on the day but finished with a weekly loss of nearly 2.5%. It had fallen 12.4% on Monday.

In currencies, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.12% to 103.16.

Against the Japanese yen, the dollar weakened 0.42% to 146.66. The euro was down 0.03% at $1.0915.

Oil prices settled higher as fears of a widening Middle East conflict persisted, with U.S. crude gaining 0.85% to end at $76.84 a barrel while Brent advanced to $79.66 per barrel, up 0.63% for the day.

In U.S. Treasuries, yields slipped after a volatile week while investors eyed the next week's key inflation data for fresh clues on the potential size of a September rate cut.

The yield on benchmark U.S. 10-year notes fell 5.7 basis points to 3.94%, from 3.997% late on Thursday. The 30-year bond yield fell 6.5 basis points to 4.2205% from 4.286%.

The 2-year note yield, which typically moves in step with interest rate expectations, rose 0.9 basis points to 4.0531%, from 4.044% late on Thursday.

Gold prices were a touch firmer, with spot gold adding 0.12% to $2,429.60 an ounce. U.S. gold futures gained 0.29% to $2,429.20 an ounce.

(Reporting by Chibuike Oguh, Sinéad Carew in New York and Huw Jones in London; Editing by Ana Nicolaci da Costa, Gareth Jones and Josie Kao and Marguerita Choy)

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