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Stocks Close at Record Highs on Growth Optimism: Markets Wrap

Sarah Ponczek and Olivia Rinaldi
Stocks Close at Record Highs on Growth Optimism: Markets Wrap

(Bloomberg) -- U.S. stocks pushed higher for a third day as investors looked past weak economic data and mixed corporate results, including an unexpected quarterly loss for Boeing. Treasuries advanced along with bonds in Europe.

The Nasdaq Composite Index climbed to a record after Texas Instruments posted strong earnings, while UPS’s bullish profit guidance helped push the S&P 500 to an all-time closing high. Along with Boeing, Caterpillar weighed on the Dow Jones Industrial Average. After the close of regular trading, Facebook climbed on higher-than-forecast revenue, while Ford slumped as earnings missed estimates.

“I like that we do have this idiosyncratic risk in the market right now where these indices are being pushed by the underlying constituents, not necessarily global-macro forces,” said Joe Mallen, chief investment officer of Helios Quantitative Research in Tampa, Florida.

European bond yields dropped to unprecedented lows as disappointing manufacturing data added to concerns about the region’s growth and bolstered expectations for more central bank accommodation, including by the Federal Reserve.

“The Fed backdrop is providing some cushion so-to-speak,” Nancy Perez, senior portfolio manager at Boston Private Wealth, said by phone. “It would be very healthy to trade sideways here and digest the earnings, digest trade policy.”

Broadly positive earnings reports have buoyed stocks this so far week, though Deutsche Bank’s woes and flagging demand reported by carmakers and other manufacturers gave investors a reminder of the uncertain outlook for the global economy. To add to that, the U.S. Justice Department opened a broad probe into whether dominant technology firms are unlawfully stifling competition, hitting shares of Amazon and Alphabet.

Central banks remain in focus after the IMF on Tuesday revised its forecasts for global growth lower and the Federal Reserve is seen trimming its policy rate by a quarter percentage point next week. The European Central Bank may hold fire tomorrow, though its message will be closely parsed for signs of a September move as the poor economic data ramp up pressure to deliver stimulus.

Elsewhere, Britain’s pound rebounded from a two-year low following Boris Johnson’s victory in the contest to succeed Theresa May as U.K. prime minister, though the nation’s equity benchmark underperformed. The dollar dropped for the first time in four days.

Here are some key events coming up:

Earnings season rolls on with companies including Amazon.com, Alphabet, Unilever and McDonald’s still to report this week.Thursday brings the European Central Bank policy decision. Economists widely expect officials to signal their readiness to cut interest rates and potentially broaden stimulus. Some see the chance of an immediate rate cut. ECB President Mario Draghi holds a briefing afterward.

These are the main moves in markets:

Stocks

The S&P 500 Index climbed 0.5% to 3,019.56 as of 4:06 p.m. New York time, the highest on record.The Nasdaq Composite Index climbed 0.8% to 8,321.50, the highest on record with the biggest increase in more than three weeks.The Dow Jones Industrial Average fell 0.3% to 27,269.97, the largest fall in a week.The Stoxx Europe 600 Index was little changed at 391.73, the highest in almost three weeks.The U.K.’s FTSE 100 Index sank 0.7% to 7,501.46, the largest decrease in almost eight weeks.Japan’s Nikkei 225 Stock Average climbed 0.4% to 21,709.57, the highest in almost three weeks.Hong Kong’s Hang Seng Index gained 0.2% to 28,524.04.

Currencies

The Bloomberg Dollar Spot Index fell 0.1% to 1,198.85.The Japanese yen was little changed at 108.20 per dollar.The euro sank 0.1% to $1.1138, the weakest in almost eight weeks.The British pound increased 0.3% to $1.2482.The Swiss franc was little changed at $0.9854, the weakest in a week.The Canadian dollar decreased 0.1% to C$1.3148 per U.S. dollar, the weakest in more than four weeks.The Australian dollar decreased 0.4% to 0.698 per dollar, the weakest in almost two weeks.

Bonds

The yield on two-year Treasuries sank two basis points to 1.82%.Germany’s 10-year yield fell two basis points to -0.38%, reaching the lowest in almost three weeks on its sixth straight decline and the biggest fall in a week.The yield on 10-year Treasuries declined four basis points to 2.04%, the largest fall in a week.Britain’s 10-year yield fell one basis point to 0.678%, reaching the lowest in almost three weeks on its sixth straight decline.

--With assistance from Vildana Hajric.

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net;Olivia Rinaldi in New York at orinaldi1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

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