Wall Street posts slight gains as U.S. bond yield hits 3 percent

Global Stocks Markets

U.S. stocks rose on Tuesday as strong earnings from Caterpillar, Verizon and a host of other big names boosted optimism about corporate America’s health, but the gains were curbed by rising bond yields. 

The yield on the 10-year U.S Treasury notes hit 3 percent for the first time since 2014, due to a growing supply of government debt and accelerating inflation as commodity prices gained. [US/]

Caterpillar (CAT.N), which serves as a bellwether for global economic activity jumped 4 percent, while Pratt & Whitney aircraft engines-maker United Tech (UTX.N) rose 1.3 percent. Both companies topped quarterly profit estimates and raised their full-year earnings forecasts.

The results also run contrary to a 0.4 percent fall in the S&P industrials index .SPLRCI this year due to fears of a tit-for-tat trade war with China.

About 18 percent of the S&P 500 companies had reported results as of Monday, with 78 percent topping profit estimates, according to Thomson Reuters I/B/E/S.

That has pushed up analysts’ estimates for earnings growth in the quarter to nearly 20 percent, from 18.6 percent just over than a week back, making it the strongest in seven years.

One dampener was Google-parent Alphabet (GOOGL.O), which dipped 2.5 percent as investors focused on rising costs rather than the profit beat.

At 10:01 a.m. EDT the Dow Jones Industrial Average .DJI was up 65.45 points, or 0.27 percent, at 24,514.14, the S&P 500 .SPX was up 7.14 points, or 0.27 percent, at 2,677.43 and the Nasdaq Composite .IXIC was up 20.42 points, or 0.29 percent, at 7,149.02.

Coca-Cola (KO.N) gained 2 percent after its revenue beat estimates, helped by higher demand for Coke Zero Sugar and new flavors of Diet Coke. Verizon (VZ.N) jumped 1.3 percent after its profit beat expectations.

3M (MMM.N) fell 6.1 percent after it managed to only match profit estimates.

A drop in sales for the screen glass unit of telecoms parts producer Corning Inc (GLW.N) may also add to growing market nerves about demand for high-end smartphones.

Oil rose above $75 a barrel to its highest since November 2014, supported by OPEC-led production cuts, strong demand and the prospect of renewed U.S. sanctions on Iran. [O/R]

Advancing issues outnumbered decliners by a 2.09-to-1 ratio on the NYSE and by a 2.07-to-1 ratio on the Nasdaq.

The S&P index recorded 10 new 52-week highs and 11 new lows, while the Nasdaq recorded 42 new highs and 23 new lows.

Boeing, Apple lead slide as China-U.S. trade spat intensifies

Global Stock Markets

Boeing and Apple led a slide in big U.S. manufacturers and technology companies on Wednesday, bearing the brunt of a deepening trade conflict between China and the United States.

China and the United States announced tariffs on $50 billion of each others’ imports. But, while Washington’s list covers many obscure industrial items, Beijing’s covers 106 key U.S. imports including soybeans, planes, cars, and chemicals.

The speed with which the trade struggle between the two countries is ratcheting up – China took less than 11 hours to respond with its own measures – led to a sharp selloff in global stock markets and commodities.

At 9:44 a.m. ET, the Dow Jones Industrial Average .DJI was down 399.81 points, or 1.66 percent, at 23,633.55. The S&P 500 .SPX fell 28.57 points, or 1.1 percent, at 2,585.88 and the Nasdaq Composite .IXIC was down 75.51 points, or 1.09 percent, at 6,865.77.

The S&P opened and stayed below its 200-day moving average, a key support level watched by traders technical analysts, while the Dow held just above that mark. The Nasdaq dipped into negative territory for the year.

The declines were broad based. All 30 Dow components were lower. About 469 of the S&P 500 .SPX components were lower. The industrials index's .SPLRCI 1.8 percent slide was the most among the 11 major S&P sectors, as has been the case since the trade war fears surfaced.

Shares of Boeing (BA.N), the single largest U.S. exporter to China, tumbled 4 percent. Caterpillar (CAT.N) fell 3 percent.

Ford (F.N), General Motors (GM.N), Fiat Chrysler (FCAU.N) and Tesla (TSLA.O) fell between 0.8 percent and 1.88 percent.

While manufacturers were the bigger losers as a group, the technology sector’s .SPLRCT 1.74 percent drop weighed the most on the market.

Major tech names Apple (AAPL.O) and the FANG group – Facebook (FB.O), Amazon (AMZN.O), Netflix (NFLX.O) and Alphabet (GOOGL.O) were down between 1.4 percent and 2.6 percent.

Chipmakers, many of which have the highest revenue exposure to China among S&P 500 companies, also fell. All components of the Philadelphia chipmakers index .SOX were lower, led by AMD’s (AMD.O) 5 percent drop

Among the few bright spots was Lennar (LEN.N), whose shares jumped 6.2 percent after the homebuilder’s quarterly revenue beat estimates as it sold more homes at higher prices.

Declining issues outnumbered advancers by a 9.42-to-1 ratio on the NYSE and a 5.74-to-1 ratio on the Nasdaq.

Global stocks edge higher as investors await U.S. inflation data

Global Stock Markets

World shares inched higher on Tuesday, eking out limited gains as investors kept a wary eye on a U.S. inflation reading later in the day that could offer clues on the pace of Federal Reserve interest rate hikes this year. 

The MSCI All-Country World index of stocks, which tracks shares in 47 countries was up less than 0.1 percent. .MIWD00000PUS

The index has recovered about half its losses during a violent shakeout in stocks in February. The selloff came on the back of strong U.S. wage numbers, which investors feared might feed into inflation and push the U.S. central bank towards a faster pace of monetary tightening. 

While the consumer price index is a popular barometer of economic health, it is not the primary gauge the Fed uses to determine whether it is meeting its mandate of price stability. Instead, the Fed uses the personal consumption expenditure (PCE) index.

European shares opened positive, with the pan-European STOXX 600 gaining 0.1 percent. Italian and Spanish stocks rose 0.3 to 0.4 percent, while Britain's FTSE .FTSE was a laggard, down 0.1 percent.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.2 percent after spending much of the day swerving in and out of negative territory. 

The index surged 1.5 percent on Monday following firm U.S. jobs numbers on Friday, while low wage growth eased concerns about inflation and faster central bank rate hikes. 

But a mixed performance by U.S. shares overnight tempered the rally. 

The S&P 500 .SPX and the Dow .DJI slipped on Monday as the U.S. tariffs signed into law last week weighed on industrials, while a rise in tech stocks boosted the Nasdaq .IXIC to a new record high. 

In currencies, the Japanese yen fell over half a percent to a two-week low against the dollar, pressured by a political scandal engulfing Japanese Prime Minister Shinzo Abe’s government. It also lost ground to the euro.  

The dollar index .DXY, which measures the greenback against a basket of currencies, was up 0.2 percent.

The benchmark 10-year U.S. Treasury note yield US10YT=RR stood little changed at 2.879 percent.

In commodities, crude oil prices staged a recovery after sliding on concerns over rising U.S. output.

U.S. crude futures CLc1 were up 0.2 percent to $61.51 per barrel. Brent LCOc1 also rose 0.2 percent to $65.08 per barrel.

Spot gold fell 0.2 percent to $1,318 per ounce. 

Asian shares inch up as investors await U.S. tax reforms, dollar steadies

Asian Stock Markets

Asian shares edged up slightly on Wednesday, shrugging off Wall Street’s losses as the long-awaited U.S. tax reform bill wound its way through Congress, while higher Treasury yields underpinned the dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.1 percent, and Japan's Nikkei stock index .N225 was slightly higher in afternoon trading.

The Dow Jones Industrial Average .DJI shed 0.15 percent on Tuesday, the S&P 500 .SPX lost 0.32 percent, and the Nasdaq Composite .IXIC dropped 0.44 percent.

The U.S. House of Representatives initially passed the tax legislation in a Tuesday afternoon vote, but the bill included provisions that did not comply with Senate rules. The Senate was expected to vote on a revised version of the bill, with the offending provisions removed. If the Senate approves the bill as expected, the House will vote again on Wednesday.

The bill slashes the corporate income tax rate to 21 percent from 35 percent. That would boost overall earnings for S&P 500 companies by 9.1 percent, according to UBS equity strategists, though some investors said those expectations are already reflected in recent stock market gains to record highs.
Congress is also struggling to pass a temporary spending bill by midnight on Friday to fund the government and avert a partial shutdown.

Higher U.S. Treasury yields bolstered the greenback on Tuesday, with the benchmark 10-year yield notching a seven-week high of 2.472 percent US10YT=RR. It last stood at 2.450 percent in Asian trading, compared with its U.S. close on Tuesday of 2.463 percent.

The dollar edged up 0.1 percent to 113.02 yen JPY=, while the euro was steady at $1.1842 EUR=.

The European currency got a lift from higher eurozone rates, gaining 0.5 percent on Tuesday, when central bank governors of Estonia, Slovakia and Germany all discussed the need to shift the debate from bond purchases to other tools such as interest rates.

Against a basket of six rival currencies, the dollar was slightly higher on the day at 93.458 .DXY.
Bitcoin was down 3.8 percent on the Bitstamp exchange at $17,025.00 BTC=BTSP, losing almost one-fifth of its value from a peak hit just three days ago.

U.S. crude oil futures extended gains, helped by a North Sea pipeline outage, OPEC-led supply cuts and expectations that U.S. crude inventories had fallen for a fifth week. [O/R]

U.S. crude CLc1 was up 0.3 percent, or 16 cents, at $57.72 a barrel, after settling up 0.5 percent on Tuesday. Brent crude LCOc1 was 0.1 percent higher, adding 13 cents to $63.88 after gaining 0.6 percent overnight.