Stocks stagnate, US Treasury yields weaken as markets price in Fed chair’s comments

Stocks stagnate, US Treasury yields weaken as markets price in Fed chair’s comments
Stocks stagnate, US Treasury yields weaken as markets price in Fed chair’s comments

Global stocks were flat while U.S. Treasury yields fell on Tuesday as markets factored in data showing a still-tight jobs market as well as the prospect of interest rate cuts following comments from Federal Reserve Chairman Jerome Powell.

The Fed still needs more data before cutting interest rates to ensure that recent weaker inflation readings accurately reflect underlying price pressures, Powell said.

said at a conference

in Portugal on Tuesday.

His comments came after Labor Department data on Tuesday showed that employment in the European Union was falling.

Job vacancies

a measure of labor demand, rose 221,000 to 8.140 million on the last day of May, the lowest level since February 2021 and slightly above Wall Street expectations.

The yield on benchmark 10-year US bonds fell 3.2 basis points to 4.447%.

“Listening to some of his comments, it seems like he’s setting the stage for cuts perhaps in September, which is where the market thinks they’re going to start,” said James St. Aubin, chief investment officer at Sierra Mutual Funds in Santa Monica, Calif.

“We’ve seen a slight increase in job openings, which seems to indicate that the labor market is holding up. Bond yields have come down, I think that’s partly because of Powell’s comments, which seem to be more dovish,” St-Aubin added.

The MSCI index of global stocks rose 0.03% to 804.05. In Europe, the STOXX 600 index fell 0.44% as the rebound in French stocks after the first round of parliamentary elections faded.

On Wall Street, the benchmark S&P 500 index held steady during a choppy market, with consumer discretionary and utilities stocks leading the way, while health care and energy stocks were the biggest detractors.

The Dow Jones Industrial Average fell 54.42 points, or 0.14%, to 39,115.10, the S&P 500 gained 0.25 points, or 0.00%, to 5,475.19 and the Nasdaq Composite gained 21.71 points, or 0.12%, to 17,901.01.

Oil prices pared earlier gains as the projected track of Hurricane Beryl continued to shift away from key offshore production areas in the U.S.-regulated northern Gulf of Mexico.

Brent crude fell 0.01% to $86.60 a barrel, while U.S. crude lost 0.24% to $83.19 a barrel.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was down 0.04% at 105.80. The euro was down 0.05% at $1.0733.

Against the Japanese yen, the dollar strengthened 0.06 percent to 161.56. It hit 161.745 on Tuesday, its highest level in nearly 38 years, mainly due to the wide gap between interest rates in the United States and Japan.

Gold prices fell. Spot gold fell 0.34% to $2,323.71 an ounce, while U.S. gold futures fell 0.08% to $2,325.80 an ounce.

($1 = 161.5900 yen) (Reporting by Chibuike Oguh in New York, editing by Chris Reese)

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