Dip Buyers Lift US Stocks Despite Rise in Oil: Markets Wrap
(Bloomberg) — Bargain hunters are pushing stocks higher at the start of a week in which leaders of the biggest central banks and a busy data calendar will set the tone. Oil rose after a weekend of tensions in the Middle East.
S&P 500 futures gained 0.9%, with traders buying the dip after a rotation out of this year’s top-performing stocks sent the US benchmark to its second-worst week of the quarter. Nasdaq 100 contracts advanced 1.2%. A mix of space, software and artificial-intelligence infrastructure names led premarket gains. Comcast Corp. jumped 23% on a plan to split its business.
Brent climbed 0.9% to $72.67 a barrel following flare-ups between the US and Iran. While the two sides have since agreed to halt the attacks, the pace of shipments through the Strait of Hormuz has slowed as shipowners remain wary of crossing the waterway. President Donald Trump said talks are set to resume in Qatar on Tuesday.
Traders will shift their focus this week to the annual gathering of central bankers in Portugal, where Federal Reserve Chair Kevin Warsh will make his public debut outside the US. Aside from hints on interest rates, questions over financial stability, including those linked to the artificial-intelligence boom, will be among the themes under discussion.
Another prominent event will be the monthly US jobs report on Thursday, the culmination of the usual flurry of labor data that opens each month.
“After the hawkish pause of the Fed earlier in the month, one would have expected market exuberance to stall, but that doesn’t seem to be the case,” said Andrea Gabellone, head of global equities at KBC Securities. “That means the market believes that US exceptionalism is there to stay. It also means that the rally will likely broaden toward other corners of the market.”
Europe’s Stoxx 600 fluctuated. Chinese equities led a modest advance in Asian shares after the central bank set the rate on an overnight liquidity tool at a lower-than-expected level.
The dollar was little changed. Treasury yields climbed, with the 10-year rate up two basis points to 4.39%. Bonds remain vulnerable in the face of elevated inflation as money markets continue to price a Fed rate hike as soon as September. Richmond Fed President Thomas Barkin warned Sunday inflation was too high.
“Our economists continue to expect a relatively hawkish policy path, with two rate hikes penciled in later this year,” noted Jim Reid at Deutsche Bank AG. “However, near-term guidance is likely to remain limited, leaving markets to take their cues primarily from incoming data.”
As the S&P 500 heads for its best quarter since 2020, one of the biggest debates is how much further high-flying chipmakers can push markets higher after an almost one-way rally turned more volatile in recent weeks.
US equities are likely to enjoy another robust earnings season on the back of a “solid macro backdrop” and the AI investment boom, according to Goldman Sachs Group Inc. strategists. RBC Capital Markets strategists raised their 12-month target for the S&P 500 index to 8,150 points.
“It wasn’t a full-blown selloff, but more a rotation of the kind that we saw many times in the last 12 months,” said Guy Miller at Zurich Insurance. “There are strong fundamentals in terms of super-normal profits. In semiconductors in particular, there’s still clearly a supply-demand imbalance.”
What Bloomberg Strategists Say:
“Investors still recognize that the fundamental backdrop supports owning equities, but they are expressing that view with a degree of caution. That caution is welcome if you’re concerned about excessive optimism or the risk of bubbles forming. Taken together, improving market breadth, lower yields and continued investor discipline suggest there is still likely upside.”
— Skylar Montgomery Koning, Macro Strategist. Click here for the analysis.
Corporate News:
Verizon Communications Inc. and the UK’s BT Group Plc agreed to create a joint venture for their international businesses in a merger that will take the low-margin units off their books and allow the carriers to focus on their home markets. Rocket Lab Corp. agreed to buy Iridium Communications Inc., a pioneer in satellite telephones, for $54 a share in a cash-and-stock transaction. Millennium Management is setting up an artificial intelligence laboratory to expand the development and application of cutting-edge technologies at the firm. British American Tobacco Plc is reducing its 47,000-strong global workforce by about one-fifth as part of its sweeping plan to bring down costs and simplify operations. Martin Marietta Materials Inc. agreed to combine with building materials supplier Lhoist North America in a transaction valued at $13.5 billion, including debt. South Korea is orchestrating investments of at least 1,350 trillion won ($880 billion) from companies including Samsung Electronics Co. and SK Hynix Inc. into chips and data centers. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.9% as of 8:30 a.m. New York time Nasdaq 100 futures rose 1.2% Futures on the Dow Jones Industrial Average rose 0.5% The Stoxx Europe 600 was little changed The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1403 The British pound rose 0.3% to $1.3235 The Japanese yen was little changed at 161.89 per dollar Cryptocurrencies
Bitcoin rose 1.3% to $60,350.08 Ether rose 1.1% to $1,588.01 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.38% Germany’s 10-year yield advanced one basis point to 2.86% Britain’s 10-year yield was little changed at 4.73% Commodities
West Texas Intermediate crude rose 1.2% to $70.08 a barrel Spot gold fell 1.2% to $4,038.89 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling and Sujata Rao.
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