US stocks, dollar tumble as investors rethink 'Trump trade'

NEW YORK - Stocks on major markets and the US dollar sold off while bond yields fell on Wednesday as investors fled risky assets amid uncertainty about US President Donald Trump's ability to deliver on his tax and banking reforms and infrastructure spending.

Reports that Trump asked then-Federal Bureau of Investigation Director James Comey to end a probe into the former national security adviser have raised questions over whether Trump tried to interfere with a federal investigation.

US stock market declines accelerated in afternoon trading, and major US indexes ended near session lows. The Dow Jones industrial average fell 372 points, and both the Dow and S&P 500 suffered their worst percentage drops since Sept. 9.

The CBOE Volatility index, the most widely followed barometer of expected near-term stock market volatility, ended above the 15 level in its highest close since April 13. The US dollar index has now erased its post-election gains.

A small but growing number of Trump's fellow Republicans called on Wednesday for an independent probe of possible collusion between his 2016 campaign and Russia.

The news came after a tumultuous week at the White House when Trump unexpectedly fired FBI director Comey and reportedly disclosed classified information to Russia's foreign minister about a planned Islamic State operation.

Optimism over pro-growth economic policies under Trump helped drive a sharp rally in US stocks after the Nov. 8 US election. Even with Wednesday's declines, the S&P 500 stock index is up 10.2 percent since last November's US elections though.

"It's certainly a day when the chickens are coming home to roost," said Donald Selkin, chief market strategist at Newbridge Securities in New York.

"The (equity) bull market is not over by any means, but between the political stuff and the fact that the next earnings season is three months away, there's going to be a lack of motivation."

The Dow Jones Industrial Average was down 372.82 points, or 1.78 percent, to end at 20,606.93, the S&P 500 index lost 43.64 points, or 1.82 percent, to 2,357.03 and the Nasdaq Composite dropped 158.63 points, or 2.57 percent, to 6,011.24.

The Nasdaq had its worst day since June 24. Both the Dow and S&P 500 fell below their 50-day moving averages for the first time since April 21.

While previous threats to Trump's plans have rattled investors, they had failed to cause any significant pull back in stocks. The VIX last week closed at 9.77, its lowest close since December 1993.

Bank stocks, which outperformed in the post-election rally, were the worst hit on Wednesday. The S&P 500 financial sector tumbled 3 percent.

At nearly 18 times forward earnings, the S&P 500 trades at a significant premium to its long-term average valuations of 15 times, according to Thomson Reuters data.

MSCI's gauge of stocks across the globe fell 1.2 percent, while European shares ended down 1.4 percent.

"It's registering with more investors that it's going to be hard to get back on track with the latest allegations," Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

Prices of bonds, seen as safe-haven assets, rallied, while yields were on track for their biggest daily percentage drops since July.

Benchmark 10-year notes gained a full point in price to yield 2.22 percent, the lowest since April 21, and down from 2.33 percent late on Tuesday.

The dollar index, which tracks the US currency against six peers and had scaled a 14-year peak of 103.82 on Jan. 3, fell 0.6 percent to its lowest level since Nov. 9, surrendering all of its "Trump bump" gains. The dollar also fell by nearly 2 percent against the yen.

In commodity markets, safe-haven gold hit a two-week high, while oil prices were higher. Spot gold rose for a fifth day and was up 1.8 percent at $1,258.38 an ounce.

Brent crude gained 1.1 percent to settle at $52.21 per barrel, while US light crude rose 0.8 percent to settle at $49.07.

source: news.abs-cbn.com

Asia stocks gain as Wall Street rises before Fed, dollar stands tall

TOKYO - Asian stocks gained early on Wednesday, with sentiment lifting as Wall Street rose before a likely hike in U.S. interest rates, while the dollar held to large gains made as Treasury yields picked up.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent.

Australian shares climbed 1.5 percent and Japan's Nikkei .N225 gained 1.9 percent.

On Wall Street Tuesday, the Dow .DJI added 0.9 percent and the S&P 500 advanced 1.1 percent. Bank stocks, which will likely benefit from higher rates, were among the market leaders with a 2.4 percent advance on the S&P financial sector index.

The Federal Reserve is expected to announce a hike in interest rates when its two-day policy setting meeting ends later in the day. It would be the first U.S. rate hike in nearly a decade, signaling the beginning of an end to an expansionary monetary policy that has supplied a tidal wave of liquidity to risk asset markets globally.

With a hike seen as a mostly done deal after more than a year of anticipation, investor focus is fixed on how the Fed might opt to pace its tightening cycle next year. The central bank has hinted that it intends to hike rates gradually.

"(Fed chair) Yellen should stress data-dependence in following up with further tightening next year and will surely not drop any heavy hints about the timing of the next move. No one can be confident how the dollar will emerge from all this but volatility seems assured," wrote Sean Callow, a senior strategist at Westpac.

The dollar index last stood at 98.183, having gained 0.6 percent on Tuesday.

The dollar was steady at 121.67 yen, pulling further away from a six-week trough of 120.35 struck Monday. The euro traded near $1.0900 after recoiling from a seven-week peak of $1.1060.

Supporting the greenback, Treasury yields rose overnight as gains on Wall Street reduced the appeal of safe-haven bonds and stable U.S. consumer prices data supported the case for a Fed rate hike.

In commodities, crude oil dipped after gaining for two successive days. U.S. crude was down 1.2 percent at $36.89 a barrel. Concerns of global oversupply had sent crude to a seven-year low of $34.53 earlier this week.

source: www.abs-cbnnews.com

US stocks surge on jobs data, China trade growth

gmanews.tv

NEW YORK – Investors sent the Dow Jones industrials back above 10,000 after a stream of upbeat economic news convinced them that maybe things aren't so bad after all.

The Dow rose 273 points to 10,172. All the major indexes climbed more than 2.5 percent. Falling Treasury prices pushed interest rates higher as demand for safe investments eased.

Energy stocks led the market higher after they slid late Wednesday on concerns that BP would be forced to cut its dividend because of the Gulf of Mexico oil spill. BP PLC rose 12.3 percent from a 14-year low, while Anadarko Petroleum Corp., which has a minority stake in the rig that caused the spill, rose 12.4 percent.

Most bank stocks rose but Goldman Sachs Group Inc. fell 2.2 percent to its lowest level in a year following news reports that it was target of another investigation by the Securities and Exchange Commission. The SEC has already filed civil fraud charges against the company. The company has denied wrongdoing.

Investors have pounded stocks for more than a month because of concerns that Europe's sovereign debt crisis would slow a rebound worldwide. Thursday's advance was the latest swing in a market that has been volatile for weeks, including three late-day slides in the past four days. Some of the advance could be coming from what's known as "short-covering." That's when traders are forced to buy stock after having earlier sold borrowed shares in a bet that the market would fall. The moves can add to the market's climb.

Markets around the world rose after China said exports rose 48.5 percent in May, while imports jumped 48.3 percent. The increase in trade provides some relief to fears that debt problems in Europe would halt a global economic recovery. The 27-nation European Union is China's largest trading partner. China has said it wanted to cool its economy to keep it from getting overheated. Traders had grown concerned that China would inadvertently slow growth too much and hurt a global rebound.

"China so far has been able to pull this off," said John Apruzzese, partner and equity portfolio manager at Evercore Wealth Management in New York. "There's more focus on Europe but I think it's more about China."

The Dow rose 273.28, or 2.8 percent, to 10,172.53. It was the Dow's first close above 10,000 this week and its biggest gain since May 27 when it climbed nearly 285 points after China said it didn't plan to sell its European government bonds.

The Standard & Poor's 500 index rose 31.15, or 3 percent, to 1,086.84, while the Nasdaq composite index rose 59.86, or 2.8 percent, to 2,218.71.

Brian Lazorishak, portfolio manager at Chase Investment Council in Charlottesville, Va., said he wants to see the market at least hold its gains for a few days before he considers Thursday's advance as more than a blip.

"We've all become a little gun-shy," he said.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.33 percent from 3.18 percent late Wednesday.

The euro, used by 16 countries in Europe, rose to $1.2111. The currency has become an indicator of investor confidence in Europe's ability to cut debt without spoiling a recovery.

Traders grew more confident that a global rebound was intact. Beyond the news out of China, Japan's economy grew faster than expected in the first three months of the year. In Australia, the government said full-time employment rose for a ninth consecutive month in May.

While investors worry about Europe's debt problems, there are also concerns about the job market in the US An unemployment rate of 9.7 percent remains one of the biggest obstacles to a strong domestic rebound.

The Labor Department said new claims for unemployment fell by 3,000 to a seasonally adjusted 456,000. While that figure fell short of economists' forecast, traders were heartened by numbers showing total claims last week dropped by the largest amount in almost a year. Total unemployment benefit rolls fell by 255,000 to 4.5 million.

On its face, the drop is good news but there it also could indicate that people have run out of their state benefits and are moving to longer-term federal benefits. Still, the drop in total claims provides some hope that laid-off workers are starting to find jobs. It was welcome relief after the Labor Department said last week that private employers slowed their hiring in May to the lowest level since January.

Crude oil rose $1.10 to $75.48 per barrel on the New York Mercantile Exchange. It was the first close above $75 in about a month. Gold fell.

Among energy stocks, BP PLC rose $3.58, or 12.3 percent, to $32.78, while Anadarko rose $4.32, or 12.4 percent, to $39.15.

Goldman fell $3.03, or 2.2 percent, to $133.77. It traded as low as $131.30, below a previous 12-month low of $134.20.

About 2,700 stocks rose on the New York Stock Exchange, while only about 375 fell. Consolidated volume fell to 5.2 billion shares from 6.2 billion Wednesday.

The Russell 2000 index of smaller companies rose 21.50, or 3.5 percent, to 639.79.

Britain's FTSE 100 rose 0.9 percent, Germany's DAX index rose 1.2 percent, and France's CAC-40 rose 2 percent. Japan's Nikkei stock average rose 1.1 percent. — AP