© Reuters. Investors sit in front of a board displaying stock information at a brokerage firm on the first day of trading in China since the Lunar New Year, in Hangzhou, Zhejiang Province, China, February 3, 2020. China Daily via Reuters
Written by Stephen Kolb
NEW YORK (Reuters) – U.S. stocks rose and the dollar slipped on Tuesday as strong economic data helped quell recession fears, adding to investors’ appetite for risk.
All three major US stock indices have been green from the start of the bell, with huge tech-related companies — particularly those embroiled in the recent artificial intelligence mania — putting the Nasdaq in the lead.
An unexpected jump in new orders for US durable goods, along with strong readings of new home sales and consumer confidence, helped calm concerns about a looming recession amid the Federal Reserve’s efforts to dump cold water on demand in order to rein in inflation.
“We’ve got a lot of data, and it shows the economy is very strong,” said Jay Hatfield, portfolio manager at InfraCap in New York.
“We are in a trading range as we head into the holiday week and expect to trade a little sideways in July,” added Hatfield. “The rally will widen as we enter earnings season.”
The strong data appears to be paving the way for a 25 basis point rate hike at the end of the Fed’s July meeting.
Financial markets are pricing in a 74.4% chance of this happening, according to CME’s FedWatch tool. The question remains whether the Fed will call it a day or tighten further in September and beyond.
Fed Chair Jerome Powell’s counterpart, European Central Bank President Christine Lagarde said on Tuesday that the European Central Bank is unable to announce an end to raising interest rates in the face of soaring inflation.
The index rose 114.07 points, or 0.34%, to 33,828.78 points, increased 16.75 points, or 0.39%, to 4,345.57 points, and added 64.21 points, or 0.48%, to 13,399.99.
European stocks fell as hawkish comments from Lagarde offset gains in luxury goods and financials on hopes of a policy stimulus from China.
The European index lost 0.05% and the MSCI measure of equities around the world rose 0.38%.
Emerging market stocks rose 0.61%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed up 0.82%, while losing 0.49%.
The US currency fell against a basket of global currencies with the strength of the euro and the yen.
It fell 0.22%, with the euro rising 0.43% to $1.0951.
The Japanese yen fell 0.34% against the dollar at 144.04 per dollar, while the pound sterling was last traded at $1.2736, up 0.19% on the day.
US Treasury yields rose as strong economic data eased recession fears.
The benchmark 10-year note fell 13/32 to 3.7678% from 3.719% late Monday.
The 30-year note price last fell 13/32 to 3.8413% from 3.819% late Monday.
Crude oil prices pared losses after US economic indicators surprised to the upside, ahead of energy demand data expected later in the session.
It fell 0.37% to $69.11 per barrel and was last at $74.24, down 0.15% on the day.
Gold prices fell as strong economic reports dampened the safe-haven metal’s luster.
It fell 0.3% to $1,917.19 an ounce.