US stocks ended higher, Treasury yields rose on credit easing and trade concerns
Wall Street shares rose and U.S. Treasury yields rebounded on Friday as investors assessed the health of regional banks and President Donald Trump said face-to-face trade talks with Chinese President Xi Jinping were still ongoing.
All three major US stock indexes closed in positive territory after struggling to determine direction in early trading, and all three posted weekly gains.
Benchmark Treasury yields and the dollar turned higher, while gold retreated after record highs sent the precious metal to all-time highs.
Concerns over potential systemic credit problems in the banking sector eased a day after Zions disclosed it expected a $50 million loan loss in the third quarter and Western Alliance filed a lawsuit alleging fraud by an investment firm.
The KBW Regional Banking Index rose 1.7% in a partial recovery from Thursday’s 5.0% drop.
“It took some time overnight for this to settle, but calm has emerged over what may have been overblown concerns in the regional banking space,” said Ryan Detrick, chief market strategist at the Carson Group in Omaha. “The fact is that the financial sector is probably still in good shape; only a few companies have had bad news, but this is not systemic.”
Trade tensions between Washington and Beijing were eased by Trump’s assurances that his proposed 100% tariffs on Chinese imports would be unsustainable. He confirmed he would meet Chinese President Xi Jinping in two weeks in South Korea.
“We’ve seen this movie before,” Detrick added. “A week ago, President Trump was talking 100% tariffs and markets had their worst sell-off in months and now today he’s obviously throwing some water on that, saying that he and President Xi have a good relationship.”
The first official week of the third-quarter earnings season is about to be announced, with 58% of the companies in the S&P 500 having reported earnings. Of these, 86% provided better-than-expected results. Analysts now expect third-quarter S&P 500 earnings growth of 9.3% year-over-year, up from 8.8% on Oct. 1, according to LSEG data.
The Dow Jones Industrial Average rose 238.37 points, or 0.52%, to 46,190.61, the S&P 500 rose 34.94 points, or 0.53%, to 6,664.01 and the Nasdaq Composite rose 117.44 points, or 0.52%, to 22,679.98.
European shares closed lower as signs of credit stress at regional US banks reduced investors’ risk appetite, prompting them to choose safe-haven assets.
MSCI’s index of stocks across the globe fell 0.21 points, or 0.02%, to 984.18.
The pan-European STOXX 600 index fell 0.95%, while Europe’s FTSEurofirst 300 index fell 20.72 points, or 0.91%.
Developing country shares fell 16.86 points or 1.22% to 1,362.10. MSCI’s index of Asia Pacific shares outside Japan (.MIAPJ0000PUS) closed down 1.24% to 706.04, while Japan’s Nikkei fell 695.59 points, or 1.44%, to 47,582.15.
US Treasury yields rose and the dollar strengthened on concerns stemming from the escalating trade war and declining credit quality of regional banks. However, the Greenback remains on track for a weekly decline.
The benchmark 10-year U.S. Treasury yield rose 2.9 basis points to 4.005%, from 3.976% late Thursday.
The 30-year Treasury yield rose 1.7 basis points to 4.6005% from 4.583% late Thursday.
The yield on the 2-year Treasury, which is usually in line with the Federal Reserve’s interest rate expectations, rose 3.3 basis points to 3.459%, from 3.426% late Thursday.
The dollar index, which measures the greenback against a basket of currencies including the yen and euro, rose 0.16% to 98.42, with the euro down 0.15% to $1.1669.
Against the Japanese yen, the dollar strengthened 0.04% to 150.48.
Oil prices were slightly higher but weakened this week amid a cloud of global supply uncertainty.
U.S. crude rose 0.14% to $57.54 a barrel, while Brent settled at $61.29 a barrel, up 0.38% on the day.
Gold prices retreated from record highs, pressured by a strengthening dollar.
The price of gold on the spot market fell 2.19% to $4,230.60 per ounce. US gold futures (GCc1) fell 1.3% to $4,224.60 an ounce.
Source: Reuters
