U.S. stock futures slip lower; Cook’s firing increases Fed independence worries
* GRAPHIC-World FX rates in 2019: http://tmsnrt.rs/2egbfVh
(Updates to late afternoon; adds commentary)
By Sinéad Carew
NEW YORK, July 12 (Reuters) - Wall Street stocks edged
higher and the dollar fell on expectations of a U.S.
interest-rate cut on Friday, while oil futures were little
changed as supply worries triggered by a tropical storm were
offset by signs of a global surplus for several months.
In U.S. Treasuries the yield curve was slightly steeper,
with yields largely unmoved by stronger-than-expected producer
price data and market expectations of an interest rate cut in
July held firm after two days of testimony from Federal Reserve
Chair Jerome Powell. Wall Street's benchmark, the S&P 500 .SPX , and the Dow
Jones Industrial Average rose modestly a day after hitting
record highs.
The market already rallied in expectation of a rate cut, and
now that Powell basically confirmed a July cut, it is "churning
before it makes the next move" during the quarterly earnings
season that kicks off next week, said Ken Polcari, managing
principal at Butcher Joseph Asset Management in New York.
Polcari said the improving economic data is making investors
cautious over the Fed's rate path.
"Now there's a little trepidation that if the data is coming
in strong why are we cutting rates?" he said. "The market's
thinking he's going to cut rates in July and then that'll be
it."
The Dow Jones Industrial Average .DJI rose 188.01 points,
or 0.69%, to 27,276.09, the S&P 500 .SPX gained 9.7 points, or
0.32%, to 3,009.61, and the Nasdaq Composite .IXIC added 40.41
points, or 0.49%, to 8,236.45.
All three stock indexes were on track for their second
weekly advance in a row ahead of the start of the second-quarter
corporate earnings season. Analysts are forecasting a decline in
S&P 500 earnings per share of 0.4% for the quarter, according to
I/B/E/S data from Refinitiv.
"Most of the gains this year have been from multiple
expansion. Earnings needs to start doing its part. Otherwise you
risk people looking at multiple expansion saying this looks like
a top," said Michael Antonelli, market strategist at Robert W.
Baird in Milwaukee.
The pan-European STOXX 600 index .STOXX rose 0.04% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.24%.
U.S. producer prices rose slightly in June as a rising cost
of services was offset by cheaper energy costs, beating
economists' expectations that prices would be unchanged.
The Labor Department report comes on the heels of strong
consumer price data published on Thursday, suggesting overall
inflation could continue to rise moderately despite the gains in
consumer prices. "One individual dataset will not sway or set" the Fed's
decision on interest rates, said Michael Lorizio, senior fixed
income trader at Manulife Investment Management.
In Treasuries, benchmark 10-year notes US10YT=RR last rose
3/32 in price to yield 2.1097%, from 2.12% late on Thursday.
In currencies, continued bets on a U.S. rate cut sent the
dollar lower for the third day in a row. The dollar
index .DXY , which tracks the greenback against six major
peers, fell 0.26%, with the euro EUR= up 0.19% to $1.1273.
The Japanese yen strengthened 0.63% versus the greenback at
107.83 per dollar.
In commodities, oil prices inched up on Friday as U.S. Gulf
of Mexico crude output was halved by disruptions caused by a
tropical storm, but concerns over a global crude surplus in the
months ahead limited gains. O/R
U.S. crude futures settled up 1 cent at $60.21 per barrel
while Brent crude ended up 20 cents at $66.72.
Gold prices nudged higher as investors shrugged off concerns
that the stronger-than-expected U.S. consumer inflation could
influence the Fed's decision on aggressive monetary policy
easing. GOL/ Spot gold XAU= added 0.9% to $1,416.40 an ounce.
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