- STOXX 600 closes at 14-month high
- MSCI index hits highest level since February 3rd
- The US 10-year Treasury yield falls for the first time in four sessions
SYDNEY, April 18 (Reuters) – An indicator for global equities rose for a second straight day on Tuesday, hitting its highest level since early February, as the pace of the US earnings season picked up, while government bond yields rose after three straight sessions of earnings went back.
On Wall Street, the S&P 500 ended roughly unchanged. A 1.70% decline in Goldman Sachs (GS.N) following its quarterly results along with a 2.81% decline in Johnson & Johnson (JNJ.N) weighed on the Dow Jones Industrial Average and left it almost flat on earnings nullified in Home Depot (HD.N) and Boeing (BA.N) .
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Goldman peer Bank of America (BAC.N) vacillated between gains and losses in a choppy trade after earnings beat estimates, and was last up 0.63%.
“The earnings season to date has been far better than expected for both revenue and earnings,” said Randy Frederick, managing director, trading and derivatives at Charles Schwab in Austin, Texas.
“As this earnings season got underway I felt that perhaps we set the bar for expectations a little too low, which seems to have been the case so far. The results aren’t spectacular, but the bar for expectations was pretty low.”
The Dow Jones Industrial Average (.DJI) fell 10.55 points, or 0.03%, to 33,976.63, the S&P 500 (.SPX) was up 3.55 points, or 0.09%, to 4,154.87 and the Nasdaq Composite (.IXIC) fell 4.31 points, or 0.04%, to 12,153.41.
European equities closed higher, partly on solid economic data out of China, led by gains in travel and leisure stocks, and the STOXX 600 closed at its highest level since February 11, 2022.
The pan-European STOXX 600 Index (.STOXX) was up 0.38% and MSCI Global Equities (.MIWD00000PUS) was up 0.24%. The MSCI index had previously hit its highest level since Feb. 3 at 658.29.
Investors have turned their focus to corporate earnings as the market largely priced in a 25 basis point rate hike by the Federal Reserve at its May meeting, according to CME’s FedWatch tool, with expectations hovering above 83%.
James Bullard, President of the St. Louis Federal Reserve, said in an interview with Reuters on Tuesday that the Fed should keep raising interest rates as recent data shows persistent inflation in an economy that is likely to keep growing.
However, Atlanta Federal Reserve Chairman Raphael Bostic said in an interview with CNBC that the Fed most likely has just one more rate hike ahead of it.
Longer-dated US Treasury yields fell, with the 10-year benchmark falling for the first time after three straight earnings sessions, as investors weighed whether the Fed would halt its cycle of tightening after May’s meeting.
The 10-year Treasury yield fell 1.3 basis points to 3.578%, while the US 2-year Treasury yield, which normally moves in step with interest rate expectations, rose 2.8 basis points to 4.216%.
The dollar was weaker against most major currencies after data out of China, while the pound strengthened against the greenback on wage growth data in the UK that raised expectations that the Bank of England will hike interest rates in May.
The dollar index fell 0.362%, while the euro rose 0.39% to $1.0969.
The Japanese yen rose 0.32% against the greenback to 134.05 per dollar, while sterling was last traded at $1.2426, up 0.42% on the day.
Oil prices were little changed as upbeat data from China offset concerns that rising interest rates could hurt growth prospects and weaken demand.
US crude was up 0.04% at $80.86 a barrel and Brent was at $84.77, up 0.01% on the day.
Reporting by Scott Murdoch in Sydney; Editing by Himani Sarkar
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