U.S. stocks rise, Treasuries fall on stimulus bets

U.S. stocks rose for a second day as investors got a reprieve from trade posturing and speculation mounted that European officials will bolster stimulus if growth in the region continues to sputter. Treasuries nudged lower, lifting yields from multiyear lows.

The S&P 500 jumped more than 1 per cent, notching its 13th straight session with an intraday move of that magnitude as August volatility persisted. The index lost 1 per cent in the five days for a third straight drop. Bulls got ammunition when on a report Germany would engage in deficit spending in the event of a recession. A day earlier, a European Central Bank official said monetary stimulus would be greater than investors anticipated. Germany’s Dax surged and the region’s bonds retreated.

In the U.S., chipmakers paced Friday’s advance after Nvidia Corp.’s after quarterly sales and profit beat estimates. Banks also rose as the yield curve steepened, with two-year rates slipping and 10-years turning higher. Deere & Co. rebounded even after cutting guidance, blaming in part the trade war for undermining sales. In Asia, shares in Hong Kong rallied, Chinese stocks edged higher and Korean equities fell.

The prospect for strong European stimulus bolstered confidence that the U.S. economy would be spared some of the ill-effects of the slowdown in that region. Investors remained on edge over trade after a week of back-and-forth headlines delivered wild swings in the equity and bond markets. With traders gunning for more rate cuts from the Federal Reserve, chair Jerome Powell may give a hint of his thinking when he speaks Aug. 23 at the annual central bankers retreat in Jackson Hole, Wyoming.

“The Fed, in order to keep this expansion going, needs to provide additional accommodation,” Tiffany Wilding, U.S. economist at Pacific Investment Management Co., told Bloomberg TV. “Whether they are able to arrest the downturn -- there is some question around that. Ultimately we think that they will be able to.”

Here are the main moves in markets:

Stocks

• The S&P 500 Index gained 1.45 per cent as of 4 p.m. New York time.
• The Dow Jones Industrial Average rose 1.2 per cent.
• The Stoxx Europe 600 Index rose 1.2 per cent.
• The Shanghai Composite Index climbed 0.3 per cent.
• The MSCI Emerging Market Index increased 0.7 per cent, trimming the week’s loss to 1.1 per cent.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1 per cent, pushing its weekly advance to 0.5 per cent.
• The euro fell 0.1 per cent to US$1.1092.
• The British pound jumped 0.5 per cent to US$1.2146.
• The onshore yuan dipped 0.1 per cent to 7.04 per dollar.
• The Japanese yen declined 0.2 per cent to 106.34 per dollar.

Bonds

• The yield on 10-year Treasuries rose two basis points to 1.5454 per cent.
• The yield on two-year Treasuries fell one basis point to 1.48 per cent.
• Germany’s 10-year yield rose three one basis points to -0.685 per cent.
• Britain’s 10-year yield climbed six basis points to 0.466 per cent.

Commodities

• West Texas Intermediate crude rose 0.6 per cent to US$54.76 a barrel.
• Iron ore climbed 0.3 per cent to US$86.75 per metric ton.
• Gold futures decreased 0.6 per cent to US$1,522.60 an ounce.

--With assistance from Nancy Moran, Adam Haigh and Yakob Peterseil.