WALL Street stocks rose while the US dollar slipped on Wednesday, with investors more optimistic a day after the House of Representatives passed the US$3.5 tril budget framework and a top health official expressed confidence in fighting COVID-19.
On Tuesday, the Democratic-controlled House voted to advance the framework, key to US President Joe Biden’s agenda. Investor confidence in the economic outlook also got a boost when Dr Anthony Fauci, top US infectious disease expert, said COVID-19 could be under control by early next year.
The benchmark S&P 500 and the Nasdaq closed at all-time record highs, while the Dow made gains led by financials, industrials, communications and the consumer discretionary sector. It was the S&P 500’s 51st record high close this year.
Investors remained focused on what US Federal Reserve Chair Jerome Powell might say on Friday about tapering the central bank’s bond-buying program when he speaks at the Jackson Hole symposium.
The dollar index, which measures the US currency against a basket of six major currencies, fell 0.087% to 92.832.
“Part of the risk-on move that began on Monday with FDA approval of vaccines has continued,” said Running Point Capital CEO Michael Ashley Schulman.
“Some investors feel we’re reaching the peak of the COVID-19 wave, thus reopening and economic growth will continue.”
The MSCI world equity index, which tracks shares in 50 countries, rose 0.16%, while the pan-European STOXX 600 index rose 0.01%. Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 2.41%.
US Treasury yields rose to the highest in almost two weeks ahead of Powell’s speech. Algorithmic traders also sold Treasuries after the 10-year yields broke above their 200-day moving average.
Benchmark 10-year yields gained six basis points to 1.347%.
On Wall Street, the Dow Jones Industrial Average rose 0.11% to 35,405.5, the S&P 500 gained 0.22% to 4,496.19 and the Nasdaq Composite added 0.15% to 15,041.86.
“Bond yields are rising and the reopening trade is on full blast, banks and other cyclicals are doing well. Tech is taking a back seat,” said Great Hill Capital managing member Thomas Hayes.
Oil prices rose more than 1% for a third session of gains, after US data showed fuel demand climbed to its highest since the start of the pandemic.
Brent crude rose 1.7% to settle at US$72.25 a barrel. US West Texas Intermediate (WTI) crude rose 1.2% to settle at US$68.36 a barrel.
Gold slid over 1%, retreating further below the US$1,800 level as investors awaited the Jackson Hole symposium.
Spot gold slipped 0.7% to $1,790.83 per ounce. Bullion had rallied 1.4% on Monday to the highest in nearly three weeks, driven by a broad retreat in the dollar. – Aug 26, 2021
