(Bloomberg) — Stocks rose, while Treasury yields took another dive on speculation the Federal Reserve will keep supporting the economic revival with ultra-low rates amid a resurgence in global coronavirus cases.
Dip buyers emerged after the S&P 500 posted its biggest drop in two months, finding support near its 50-day moving average. Companies that stand to benefit the most from a rebound in activity — such as industrial, financial and small-cap firms — led gains on Tuesday. Tech shares underperformed. Ten-year Treasury yields fell for a fifth-straight day to the lowest since February. Bitcoin slumped below $30,000.
Economic fears erupted this week as the spread of the delta Covid-19 variant called into question rosy growth forecasts. Money-market derivative traders pushed out expectations for when they see the Fed lifting its near-zero policy rate to March 2023, from about January of that year on Friday. Bets for where interest rates will be from June 2024 onwards fell by about 18 basis points on Monday — taking the best part of a full rate hike out of the mid-term market outlook.
“We have a ways to go on the cyclical recovery here,” Alicia Levine, head of equities and capital markets advisory vice-chair of the investment committee at BNY Mellon Wealth Management, said on Bloomberg TV and Radio. “The U.S. really has exhibited really kind of an exceptionalism in the amount of fiscal policy, the amount of monetary stimulus and also in the way we vaccinated the population. And because of that I actually am very bullish.”
Some key events to watch this week:
European Central Bank rate decision ThursdayBank Indonesia rate decision ThursdayU.S. existing home sales ThursdayThe Tokyo Summer Olympics begin Friday
Here are some of the main market moves:
Stocks
The S&P 500 rose 0.9% as of 10 a.m. New York timeThe Nasdaq 100 rose 0.3%The Dow Jones Industrial Average rose 1.2%The Stoxx Europe 600 rose 0.4%The MSCI World index rose 0.4%The Russell 2000 Index rose 1.3%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%The euro fell 0.3% to $1.1766The British pound fell 0.5% to $1.3613The Japanese yen fell 0.1% to 109.58 per dollar
Bonds
The yield on 10-year Treasuries declined three basis points to 1.16%Germany’s 10-year yield declined four basis points to -0.43%Britain’s 10-year yield declined three basis points to 0.53%
Commodities
West Texas Intermediate crude fell 0.1% to $66.34 a barrelGold futures rose 0.9% to $1,825.10 an ounce
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