Saturday , May 25 2019

US tech stocks lead rebound as Boeing tumbles anew

Bloomberg

The rally in US technology stocks continued, with Apple and Visa leading the pack as investors grew confident the Federal Reserve won’t rush to raise rates. Boeing and Brexit otherwise dominated headlines, as the planemaker’s woes deepened and the pound fell before a key vote.
The Nasdaq 100 took its two-day advance towards 3 percent after wobbling earlier in the session, as volumes remained muted.
An unexpectedly weak US inflation reading bolstered most shares on speculation the Fed can hold as the economy finds its footing. The Dow Jones Industrial Average was lower after Boeing’s two-day rout topped 11 percent when Europe’s aviation authority banned the troubled aircraft. The 10-year Treasury yield slumped, and crude oil rose after Saudi Arabia was said to extend deep supply cuts.
“I expect equity markets to remain volatile and to tread water, and there is still too much risk in risk assets, and ultimately I think bond yields will head lower but this is a process that unfolds, it’s not a sudden event,” Suzanne Hutchins, a senior portfolio manager at Newton Investment Management in London, said in an interview at Bloomberg’s New York headquarters.
The pound whipsawed amid the Brexit drama, rising overnight after Theresa May won a new deal to leave the EU. It tumbled as much as 1.1 percent versus the dollar as Attorney General Geoffrey Cox said the risks surrounding the Irish backstop — a major sticking point for those who support Brexit — were unchanged.
Alongside Brexit developments, investors have a slew of economic data to digest this week. The latest inflation reading came amid falling prices for autos and prescription drugs, adding to evidence the American economy is in no danger of overheating. In the coming days the focus will turn to Chinese production and retail sales, as well as a Bank of Japan policy decision.
US stocks rose and the dollar slipped on speculation an unexpectedly weak inflation reading will give the Federal Reserve room to stay patient on rate hikes. The pound retreated ahead of a key Brexit vote.
The S&P 500 added to its best advance since January, with technology and energy producers leading gains. Boeing again weighed on the measure, as more countries closed air space to the 737 Max plane. The company’s shares lost 4.38 percent.
The dollar fell and 10-year Treasury yields turned negative after core inflation cooled. The pound slumped after the chances of lawmakers approving a Brexit deal lessened. Crude oil climbed after Saudi Arabia was said to extend deep supply cuts.
“I expect equity markets to remain volatile and to tread water, and there is still too much risk in risk assets, and ultimately I think bond yields will head lower but this is a process that unfolds, it’s not a sudden event,” Suzanne Hutchins, a senior portfolio manager at Newton Investment Management in London, said in an interview at Bloomberg’s New York headquarters.
Britain’s exit from the European Union continues to dominate markets in the region. The pound started the day higher after PM May announced a revised divorce deal, but dropped by as much as 1.1 percent versus the dollar as Attorney General Geoffrey Cox said the risks surrounding the Irish backstop were unchanged.
The latest inflation reading came amid falling prices for autos and prescription drugs, adding to evidence the American economy is in no danger of overheating.
In the coming days the focus will turn to Chinese production and retail sales, as well as a Bank of Japan policy decision.

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