Stocks Drop and Bonds Advance Before Powell Speech: Markets Wrap - Bloomberg

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Photographer: Yuriko Nakao/Bloomberg

A global rally that drove equity gauges to records stalled on Thursday while bonds climbed before a highly anticipated speech from Federal Reserve Chair Jerome Powell.

Futures on the S&P 500 Index and the Nasdaq 100 retreated after a surge in software and media shares on Wednesday pushed both indexes to another record close. Abbott Laboratories jumped in the premarket after winning clearance for a 15-minute Covid test. Benchmark 10-year Treasury yields edged lower in a move eclipsed by European peers. The dollar turned higher versus a basket of its biggest counterparts from a level near its two-year low.

Rolls-Royce Holdings Plc tumbled, leading decliners across Europe after a record half-year loss and writedown on its main jet-engine arm as the coronavirus crisis battered air travel. WPP Plc climbed after suggesting the pandemic’s worst impact may have passed for the world’s biggest advertising group.

A bevy of central bankers and economists speak at the Jackson Hole economic symposium in a few hours via webcast entirely viewable by the public for the first time. Powell’s appearance will be closely watched for insight into the Fed’s new monetary policy framework review.

“We think the Fed’s message is clear: it will want to keep rates low across the yield curve, in line with its desire to keep financial conditions ultra-loose,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note. “Investors should keep cash holdings to a minimum and will need to search harder for yield.”

Closer look: Morgan Stanley Preps for Even Bigger Fed-Engineered Risk Rally

Traders also are monitoring news of medical advancements for the coronavirus, from Moderna Inc.’s vaccine trials to the Abbott test that will be priced at just $5.

Crude oil hovered near a five-month high as Hurricane Laura crossed over land in the refinery and LNG-rich Gulf of Mexico region.

Here are some key events coming up:

• Fed’s Powell headlines this year’s virtual Jackson Hole economic policy symposium, with Bank of England Governor Andrew Bailey and European Central Bank chief economist Philip Lane also speaking.
• The U.S. Republican National Convention continues.
• Personal spending and the PCE Deflator data are due Friday in Washington.

The Nasdaq volatility doesn’t necessarily spell a warning sign for equity markets, according to Mark Haefele, global CIO at UBS Wealth Management.

Source: Bloomberg

Here are the main market moves:

Stocks

• Futures on the S&P 500 Index dipped 0.3% as of 7:20 a.m. New York time.
• Nasdaq 100 Index futures decreased 0.2%.
• The Stoxx Europe 600 Index fell 0.3%.
• The MSCI All-Country World Index fell 0.1%.

Currencies

• The Bloomberg Dollar Spot Index increased 0.1%.
• Sterling was little changed at 0.8954 per euro.
• The Japanese yen weakened 0.1% to 106.10 per dollar.
• The Indian rupee strengthened 0.7% to 73.815 per dollar.

Bonds

• The yield on 10-year Treasuries decreased one basis point to 0.68%.
• The yield on two-year Treasuries decreased one basis point to 0.14%.
• Britain’s 10-year yield sank three basis points to 0.274%.
• Germany’s 10-year yield sank four basis points to -0.46%.

Commodities

• West Texas Intermediate crude fell 0.5% to $43.17 a barrel.
• Gold weakened 0.7% to $1,939.83 an ounce.
• Silver weakened 1% to $27.23 per ounce.
• Iron ore sank 2.2% to $117.46 per metric ton.

— With assistance by Joanna Ossinger, and Adam Haigh

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