Historical Stock Chart
6 Months : From Apr 2019 to Oct 2019
By Nathan Allen
-- S&P 500, Dow futures rise
-- European stocks largely flat after gains in Asia
-- Treasury yields climb after data shows consumer prices rose in June
Stocks in Europe and Asia tread water Thursday after Federal Reserve Chairman Jerome Powell hinted at a possible interest-rate cut in July to support the U.S. economy.
Indexes across Europe were mixed, after the S&P 500 hit 3000 for the first time Wednesday and the Nasdaq Composite closed at a record high. The pan-continental Stoxx Europe 600 was up 0.1%, while futures on the S&P 500 were trading 0.3% higher.
"There's a lot of green this morning, but no euphoria," said Vincent Juvyns, global market strategist at JPM Asset Management. "After double-digit increases this year, European markets are perhaps feeling some vertigo."
In the U.S., Cigna Corp. and CVS Health Corp. led the health-care sector higher in premarket trading after the Trump administration said it is dropping a plan to curb billions of dollars in annual rebates that drugmakers give middlemen in Medicare, a move that had the potential to disrupt the U.S. pharmaceutical industry. Cigna soared 9% and CVS jumped 6.2%.
Meanwhile, the British pound gained around 0.5% against the dollar after Bank of England Gov. Mark Carney said the U.K.'s banking system was sufficiently resilient to withstand a disorderly Brexit and the economic fallout of rising trade tensions. Still, he warned that foreign investors are shunning U.K. commercial real estate and high-risk corporate lending in a sign that uncertainty over the U.K.'s exit from the European Union is denting Britain's international allure.
Elsewhere, minutes from the European Central Bank's June policy meeting showed that officials are likely to consider injecting fresh stimulus into the eurozone in light of weak inflation data. The minutes suggest policy makers will weigh cutting the bank's key interest rate or restarting its 2.6 trillion euro ($2.92 trillion) bond-buying program.
U.S. government-bond yields extended early gains after data showed that consumer prices rose in June, a sign inflationary pressures could be stabilizing after a period of weakness. Core inflation, which strips out volatile food and energy prices, rose faster than expected. The yield on 10-year U.S. Treasurys climbed to 2.086% Thursday, from 2.061% Wednesday. Bond prices and yields move in opposite directions.
The WSJ Dollar Index, which measures the currency against a basket of its peers, dropped 0.3%.
U.S. stocks jumped and the dollar fell Wednesday after Mr. Powell said in congressional testimony that the economic outlook hadn't improved in recent weeks and warned that weak inflation could be more persistent than expected, setting the stage for a July rate cut.
Equity markets had faltered in recent sessions amid concerns that investors were overestimating the likelihood of a rate cut. Mr. Powell's dovish comments and minutes from the Fed's June policy meeting reassured traders that further easing is the most likely course of action.
Mr. Powell is speaking again on Thursday, though analysts don't expect him to provide much new information. U.S. consumer-inflation data will be in focus, as weak inflation would support the case for further monetary easing.
"Powell needs a low inflation number to bolster the rate-cut case. If it proves to be just like last week's employment read and also comes in strong, then perhaps we've all been overeager for a cut," said Mike Loewengart, head of investment strategy at E*Trade.
(END) Dow Jones Newswires
July 11, 2019 09:31 ET (13:31 GMT)
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