January 19, 2018
Tuesday, January 21, 2014

US yields and dollar up on outlook on Fed tapering

US stocks mostly rose with the S&P 500 snapping a two-session decline as the materials sector rallied, though the Dow fell on disappointing earnings by three of its components.

The Dow Jones industrial average was down 44.12 points, or 0.27 percent, at 16,414.44. The Standard & Poor's 500 Index was up 5.10 points, or 0.28 percent, at 1,843.80. The Nasdaq Composite Index was up 28.18 points, or 0.67 percent, at 4,225.76.

The S&P materials index rose 0.6 percent as one of the best performing major S&P indexes, led by a 6.6 percent gain in Dow Chemical to $45.93.

Energy stocks, another group with some correlation to the pace of economic growth, advanced 0.5 percent.

As the Federal Reserve has embarked on its plan to reduce stimulus, investors will closely monitor corporate profits for signs of growth. About eight companies have issued negative outlooks for every positive one, which would mark the lowest ratio on record should it continue.

The benchmark 10-year US Treasury note was down 1/32 in price, with its yield at 2.8286 percent.

The 10-year yield was as high as 2.867 percent overnight after hitting 2.818 percent on Friday, which was its lowest level since Dec. 11, according to Reuters data.

World stocks were flat.

European stocks rose to a 5-1/2-year high after a move by China to inject money into financial markets eased concerns about a credit crunch that could hamper growth.

European shares also were boosted as results from Unilever and Remy Cointreau SA sparked optimism.

Chinese money market rates fell after the country's central bank injected more than 255 billion yuan ($42 billion) into the financial system, easing concerns that another credit crunch was under way less than a month after a late December squeeze.

The key Euribor lending rate held steady as banks began reducing their reliance on European Central Bank funding as they turn again to the market. The ECB has pledged to intervene should the rise in bank-to-bank lending rates that underpin borrowing costs across the economy become "unwarranted."

German government bond futures fell 4 ticks.

The euro fell toward Monday's two-month troughs after the ZEW indicator of German economic sentiment for January unexpectedly fell to 61.7 after surging to 62.0 in December.

The dollar was broadly stronger, bouncing to 104.33 yen on the speculation of another Fed stimulus cut.

The yen was also under pressure after Japan's central bank began a two-day policy meeting, where it is expected to keep its massive quantitative easing program unchanged.

Among commodities, Brent crude oil settled up 0.4 percent at $106.73 a barrel as the International Energy Agency raised its forecast for global oil demand this year, citing accelerating economic growth.

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