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Sep 22, 2020

U.S. stocks rise as dip buying tempers economic concern

BNN Bloomberg's closing bell update: September 22, 2020

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Stocks climbed as dip buyers emerged after the market selloff, tempering concern over remarks from Federal Reserve officials that pointed to a slow economic recovery. The dollar rose.

Most groups in the S&P 500 advanced, with retailers and tech companies among the biggest gainers. The Nasdaq 100 notched a back-to-back rally, while the Dow Jones Industrial Average underperformed amid a drop in banks. Equities fell earlier Tuesday as Fed Chairman Jerome Powell said the economy has a long way to go before fully recovering and will need further support. Meanwhile, Chicago Fed President Charles Evans noted that rates could rise before the inflation target is reached.

American stocks are still heading toward their first monthly slide since March on concern Congress hasn’t agreed on another fiscal stimulus package, while an increase in global virus cases has raised the specter of more lockdowns. British Prime Minister Boris Johnson announced new restrictions that are likely to last six months and told people to work from home if possible, saying the country is at a “perilous turning point” for the virus.



“We think equities will move higher over the medium term, thanks to the likely development of a successful vaccine, an end to election uncertainty, the passage of new U.S. fiscal stimulus, and continued extraordinary global monetary support,” wrote Mark Haefele, chief investment officer of global wealth management at UBS Group AG. “However, the path to ‘more normal’ is likely to be bumpy,” he said, adding that “we therefore expect volatility to persist over the balance of the year.”

These are some events to watch this week:

  • Powell appears before the House Select Subcommittee on the coronavirus to discuss the central bank’s response on Wednesday.
  • New Zealand rate decision on Wednesday.
  • U.S. initial jobless claims are due Thursday.

These are some of the main moves in markets:

Stocks

  • The S&P 500 advanced 1.1 per cent as of 4 p.m. New York time.
  • The Stoxx Europe 600 Index gained 0.2 per cent.
  • The MSCI Asia Pacific Index fell 0.8 per cent.

Currencies

  • The Bloomberg Dollar Spot Index climbed 0.5 per cent.
  • The euro decreased 0.5 per cent to US$1.1708.
  • The Japanese yen depreciated 0.3 per cent to 104.98 per dollar.

Bonds

  • The yield on 10-year Treasuries advanced one basis point to 0.67 per cent.
  • Germany’s 10-year yield advanced three basis points to -0.51 per cent.
  • Britain’s 10-year yield gained five basis points to 0.203 per cent.

Commodities

  • West Texas Intermediate crude advanced 0.7 per cent to US$39.60 a barrel.
  • Gold depreciated 0.5 per cent to US$1,902.20 an ounce.

--With assistance from Joanna Ossinger, Andreea Papuc, Todd White, Yakob Peterseil, Lynn Thomasson and Claire Ballentine.

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