Stocks Climb With US Economy on ‘Sound Footing’: Markets Wrap
(Bloomberg) — US equities climbed and Treasuries fell after data showing US business activity is robust even as growth moderates, further stoking confidence the world’s largest economy can nail a soft landing.
The S&P 500 edged 0.4% higher, trading in a narrow range after manufacturing data and comments from Fed officials on Monday. Among individual movers, shares of Intel Corp. gained 3.3% after Apollo Global Management Inc. was said to have offered to make a multibillion-dollar investment in the chipmaker. Constellation Energy Corp. led power companies higher after its deal with Microsoft Corp. was well received by analysts.
US business activity expanded at a slightly slower pace in early September, according to data released Monday, while expectations deteriorated and a gauge of prices received climbed to a six-month high. Investors are looking for fresh signs on the scope for further easing after the Federal Reserve’s half a percentage point interest-rate cut last week.
“This is a somewhat inconclusive report, and therefore it shouldn’t alter Fed expectations dramatically,” according to Vital Knowledge’s Adam Crisafulli. “The flash PMIs do suggest the US economy is on reasonably sound footing, especially compared to Europe.”
Traders have been wagering on nearly three-quarters of a point more in rate cuts by year end, a slightly more aggressive path than what policymakers have indicated.
Minneapolis Fed President Neel Kashkari signaled he backs lowering interest rates by another half percentage point by year end in an essay pointing to a weakening labor market and detailing his support for the central bank’s outsize cut.
Atlanta Fed President Raphael Bostic said that starting the central bank’s cutting cycle with a large step would help bring interest rates closer to neutral levels, but officials should not commit to a cadence of outsize moves. Further out this week, investors await the Fed’s preferred price metric and data on US personal spending, due on Friday.
The US dollar was little changed, while policy-sensitive two-year Treasury yields climbed.
“With the Fed’s first rate cut since 2020 in the history books, many investors may be thinking, ‘Now what?’,” said Chris Larkin at E*Trade from Morgan Stanley. “That will keep the spotlight on economic growth, especially the jobs market.”
In Europe, meanwhile, traders were digesting manufacturing data that came in worse than expected, spurring wagers on more aggressive rate cuts from the European Central Bank. The euro slumped while European stocks edged higher. Weak PMI data for France and Germany on Monday was followed by numbers that showed the euro-area’s private-sector economy shrank for the first time since March.
The common currency weakened as much as 0.7% against the dollar.
“The market is almost demanding a more aggressive rate cut, especially after what we have seen the Fed has done,” Marija Veitmane, senior multi-asset strategist at State Street, said on Bloomberg Television. The ECB “is definitely behind the curve,” she said.
French government bonds lagged peers after a new French cabinet that is a patchwork of conservatives and centrists was named late Saturday. Investors are concerned that were the government to collapse, it would jeopardize the administration’s ability to pass a budget through parliament over the coming weeks.
Corporate Highlights:
Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel Corp., according to people familiar with the matter, in a move that would be a vote of confidence in the chipmaker’s turnaround strategy.
Brookfield Asset Management has raised an initial $2.4 billion for a fund dedicated to investing in clean energy and transition assets in emerging markets, about halfway to its goal.
Palantir Technologies Inc.’s co-founder and chief executive officer Alex Karp, has a love-hate relationship with Wall Street. He’s said that analysts don’t understand the company and that he prefers Palantir’s loyal army of retail investors.
StandardAero Inc. is seeking to raise $1.1 billion in its initial public offering, after its backer Carlyle Group Inc. had decided to pursue a listing for the aircraft maintenance services provider rather than a sale.
BNP Paribas SA agreed to buy HSBC Holdings Plc private banking operations in Germany, as the French lender seeks a bigger slice of the nation’s growing market for wealth management.
UniCredit SpA Chief Executive Officer Andrea Orcel moved to more than double the lender’s stake in Commerzbank AG, in a dramatic development that’s likely to escalate tensions with the German government.
Elsewhere, Asian markets were lifted by speculation China is close to announcing fresh stimulus, after a cut to a short-term policy rate and a rare economic briefing scheduled for Tuesday.
“The start of the Fed easing cycle should lead to more stimulus from China, particularly as the 5% growth target seems difficult to achieve,” Mohit Kumar, chief strategist and economist for Europe at Jefferies International Ltd., wrote in a note. The “stimulus measures should also be beneficial for Europe.”
Gold touched a record high earlier before paring the move, as the worsening strife in the Middle East fueled wagers on further price gains in the metal due to its haven status. US energy stocks climbed.
Key events this week:
- Australia rate decision, Tuesday
- Japan Jibun Bank Manufacturing PMI, Services PMI, Tuesday
- Mexico CPI, Tuesday
- Bank of Canada Governor Tiff Macklem speaks, Tuesday
- Australia CPI, Wednesday
- China medium-term lending facility rate, Wednesday
- Sweden rate decision, Wednesday
- Switzerland rate decision, Thursday
- ECB President Christine Lagarde speaks, Thursday
- US jobless claims, durable goods, revised GDP, Thursday
- Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday
- Mexico rate decision, Thursday
- Japan Tokyo CPI, Friday
- China industrial profits, Friday
- Eurozone consumer confidence, Friday
- US PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.2% as of 10:18 a.m. New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.4%
- The MSCI World Index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.3% to $1.1130
- The British pound rose 0.2% to $1.3346
- The Japanese yen fell 0.2% to 144.13 per dollar
Cryptocurrencies
- Bitcoin rose 0.8% to $63,698.66
- Ether rose 3.7% to $2,668.32
Bonds
- The yield on 10-year Treasuries advanced five basis points to 3.79%
- Germany’s 10-year yield declined two basis points to 2.19%
- Britain’s 10-year yield advanced four basis points to 3.94%
Commodities
- West Texas Intermediate crude rose 1% to $71.72 a barrel
- Spot gold rose 0.4% to $2,631.49 an ounce
This story was produced with the assistance of Bloomberg Automation.Stocks
- The S&P 500 rose 0.2% as of 10:18 a.m. New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.4%
- The MSCI World Index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.3% to $1.1130
- The British pound rose 0.2% to $1.3346
- The Japanese yen fell 0.2% to 144.13 per dollar
Cryptocurrencies
- Bitcoin rose 0.8% to $63,698.66
- Ether rose 3.7% to $2,668.32
Bonds
- The yield on 10-year Treasuries advanced five basis points to 3.79%
- Germany’s 10-year yield declined two basis points to 2.19%
- Britain’s 10-year yield advanced four basis points to 3.94%
Commodities
- West Texas Intermediate crude rose 1% to $71.72 a barrel
- Spot gold rose 0.4% to $2,631.49 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Margaryta Kirakosian, Alex Nicholson, John Viljoen, Catherine Bosley and Alice Gledhill.
©2024 Bloomberg L.P.