Stocks gain, dollar plunges as Fed hike lowered

  • Bank earnings help boost US stocks
  • Dollar plunges on sight of Fed hike
  • Oil jumps on Russian supply worries

NEW YORK, July 18 (Reuters) – A gauge of global equities rose for the second straight day on Monday and the dollar weakened as investors reiterated their expectations that the Federal Reserve will take a more aggressive approach in raising interest rates next week and US corporate earnings season picks up speed.

Expectations of a 100 basis point rate hike by the Fed at its policy meeting next week stood at around 31%, according to CME’s FedWatch tool after hitting 80% last week.

Recent inflation readings beat expectations but showed signs higher prices may be starting to subside, giving the US central bank a possible cushion to raise rates to a lower 75bp increment. basic.

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“As we enter the quiet period, the Fed appears to be leaning more towards 75 basis points than 100 basis points,” said Jim Barnes, director of fixed income at Bryn Mawr Trust.

“The most recent economic data we got on Friday was more bullish and today’s rise in Treasury yields appears to be catching up with market activity from Friday as well as the equity market from today.” today.”

Stocks on Wall Street, however, remained roughly unchanged after falling from previous highs, with bank stocks (.SPXBK), up 0.1%, returning to gains of nearly 3% in the stride in profits at Goldman Sachs, up 2.0% and Bank of America, up 0.3%. Read more

The Dow Jones Industrial Average (.DJI) fell 25.61 points, or 0.08%, to 31,262.65; the S&P 500 (.SPX) fell 4.87 points, or 0.13%, to 3,858.29; and the Nasdaq Composite (.IXIC) added 3.26 points, or 0.03%, to 11,455.69.

Of the 40 S&P 500 companies that reported earnings through Monday morning, 80% were above estimates, according to Refinitiv data, slightly below the 81% rate over the past four quarters.

The pan-European STOXX 600 index (.STOXX) rose 0.93% and the MSCI gauge of stocks across the world (.MIWD00000PUS) gained 0.56%. European stocks closed a three-week high earlier in the day on concerns over an energy shortage in the region. Read more

Benchmark 10-year US Treasuries last fell 9/32 to 2.9633%, down from 2.93% late Friday.

Ahead of the Fed meeting next week, the European Central Bank is set to raise rates for the first time in more than a decade on Thursday, with a 25 basis point hike expected, while Italy is embroiled in a political crisis after Prime Minister Mario Draghi tendered his resignation last week, a move that was rejected by the country’s president. Read more

As the region grapples with its own inflationary pressures, Russia’s Gazprom has told customers in Europe it cannot guarantee gas supplies due to ‘extraordinary’ circumstances, according to a letter from Gazprom which will add to European fears of fuel shortages. Read more

In light of the shifting outlook for next week’s Fed meeting, the US dollar retreated from its 20-year high last week, helping the euro move away from parity with the greenback. Read more

The dollar index fell 0.464%, with the euro up 0.64% at $1.0152.

The Japanese yen strengthened 0.35% against the greenback to 138.08 to the dollar, while the pound last traded at $1.1957, up 0.89% on the day.

Oil prices extended gains, boosted by growing concerns over gas supplies from Russia and a weaker dollar, offsetting demand fears over a possible recession and lockdowns in China. Read more

U.S. crude recently rose 4.04% to $101.53 a barrel and Brent to $105.48, up 4.27% on the day.

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Reporting by Chuck Mikolajczak; edited by Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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