Intel stock spikes after report of possible US government stake
* Saudi Arabia's oil supply fully back online -energy
minister
* Treasury yields edge down ahead of Fed policy decision
* Wall Street mixed as investors await interest rate cut
(Updates to close of U.S. markets)
By Saqib Iqbal Ahmed
NEW YORK, Sept 17 (Reuters) - Oil prices dropped sharply on
Tuesday after Saudi Arabia's energy minister said the kingdom
has fully restored its oil supply following an attack over the
weekend that shut 5% of global oil output.
Stocks edged higher and U.S. Treasury yields slipped ahead
of an expected interest rate cut by the Federal Reserve at the
conclusion of its two-day policy meeting on Wednesday.
The oil market remained on tenterhooks over the threat of
retaliation for attacks on Saudi Arabian crude oil facilities on
Saturday. During a news conference on Tuesday,
Saudi Arabia's energy minister said it will keep its full oil
supply to its customers this month and will restore its lost oil
output by the end of September. Brent crude LCOc1 futures settled at $64.55 a barrel, down
$4.47, or 6.48%. WTI crude CLc1 futures settled at $59.34 a
barrel, down $3.56, or 5.66%.
MSCI's All-Country World Index .MIWD00000PUS , which tracks
shares across 47 countries, was up 0.2% on the day.
On Wall Street, stocks finished modestly higher even as
investors shunned big bets ahead of the Fed's policy decision.
Investors are waiting for clues on how far U.S. monetary
policy easing may go, given that Fed policymakers are deeply
divided on whether more rate cuts are warranted.
"It's going to be difficult for them to signal an extremely
dovish tone, given they are already half divided at this point,"
said Chris Zaccarelli, chief investment officer at Independent
Advisor Alliance, in Charlotte, North Carolina.
The Dow Jones Industrial Average .DJI rose 33.77 points,
or 0.12%, to end at 27,110.59, the S&P 500 .SPX gained 7.72
points, or 0.26%, to finish at 3,005.68, and the Nasdaq
Composite .IXIC added 32.47 points, or 0.4%, to close at
8,186.02.
With the retreat in oil prices, shares of energy companies,
which had risen hard on Monday, gave up much of their gains.
European shares slipped slightly, although investors sought
refuge in oil stocks and defensive sectors in response to
heightened volatility after the attacks in Saudi Arabia.
The pan-European STOXX 600 index .STOXX closed
down 0.05%. U.S. Treasury yields edged lower as traders bided their time
before the Fed decision on rates. While a rate cut is seen as near-certain this week, there
are deep disagreements among Fed policymakers on whether a
reduction in borrowing costs now or further decreases are
warranted. Investors will focus on the "dot plot," a graphic
which shows where policymakers expect rates to be in the future.
"The dot plot will be interesting. I would expect to see a
lot more dispersion between all the dots going forward
especially as we know there are a lot of contrasting views at
the Fed right now," said Justin Lederer, an interest rate
strategist at Cantor Fitzgerald in New York.
Benchmark 10-year notes US10YT=RR were last up 10/32 in
price to yield 1.81%, down from 1.843% on Monday.
Investors were watching an overnight spike in dollar funding
costs after the overnight rate, or the cost for banks and Wall
Street dealers to borrow dollars USONRP= , surged to 10% on
Tuesday, the highest since at least January 2003, according to
Refinitiv data. In currency markets, the dollar slipped in choppy trading,
moving within narrow ranges. With investors adopting a wait-and-see approach ahead of the
Fed meeting, gold prices were modestly higher. Spot gold XAU=
was 0.25% higher at $1,501.6647 per ounce.
GRAPHIC-World FX rates in 2019 http://tmsnrt.rs/2egbfVh
GRAPHIC-Global assets in 2019 http://tmsnrt.rs/2jvdmXl
GRAPHIC-MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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