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Stocks hit record as U.S. yields hold above recent lows

Reuters logo Reuters 2021-07-12 By Chuck Mikolajczak
a tall building in a city: FILE PHOTO: The front facade of the NYSE is seen in New York © Reuters/BRENDAN MCDERMID FILE PHOTO: The front facade of the NYSE is seen in New York

By Chuck Mikolajczak

NEW YORK (Reuters) - A gauge of global stocks hit an intraday record on Monday and U.S. Treasury yields held above five-month lows touched last week as investors looked for signs on whether the Delta variant of the coronavirus could dent global growth.

Concerns about a slowing economic recovery due to climbing cases of the variant around the globe helped send the yield on the benchmark 10-year U.S. Treasury note to a five-month low of 1.25% last week. The yield had risen to as high as 1.78% in March as expectations for growth picked up with rising vaccination rates.

The World Health Organization warned the Delta variant was becoming dominant and many countries had yet to receive enough doses of vaccine to secure their health workers.

Analysts also cited a lack of supply for the drop in yields. Yields were little changed after Treasury sold $58 billion in three-year notes and $38 billion in 10-year notes, with a sale of $24 billion in 30-year bonds set for Tuesday.

Earnings season is poised to get underway this week, along with key inflation data on consumer and producer prices, as well as comments from Fed Chair Jerome Powell, which should help investors get a glimpse of economic growth prospects and the central bank's policy path.

"Earnings season is going to be warmly greeted as an opportunity for existing biases to be confirmed," warned Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.

Video: U.S. stocks will trend higher in 2d half -strategist (Reuters)

"Even if forecasts are not as rosy as what the most bullish had hoped, it's all going to get rationalized away."

Benchmark 10-year notes last yielded 1.3611%, from 1.356% late on Friday.

Equity gains on Wall Street were modest, with financials the best-performing S&P sector of the session ahead of results from JPMorgan Chase, Goldman Sachs and Bank of America on Tuesday.

The Dow Jones Industrial Average rose 114.17 points, or 0.33%, to 34,984.33, the S&P 500 gained 14.31 points, or 0.33%, to 4,383.86 and the Nasdaq Composite added 24.71 points, or 0.17%, to 14,726.63.

European equities also moved higher to close at a record level of 460.83. The pan-European STOXX 600 index rose 0.69% and MSCI's gauge of stocks across the globe gained 0.49% after hitting a record 727.13.

Powell's testimony later this week will be closely eyed after the People's Bank of China late on Friday moved to free up $154 billion for banks to buttress the economic recovery while the European Central Bank said it will discuss a change to its forward guidance on policy direction at next week's meeting.

Concerns about dampening economic growth weighed on crude prices, outweighing the possibility of tighter supply after talks among producers stalled last week.

U.S. crude recently fell 0.89% to $73.90 per barrel and Brent was at $75.05, down 0.66% on the day.

The safe-haven dollar moved slightly higher on the concerns about the pandemic and its potential to thwart growth.

The dollar index rose 0.12%, with the euro down 0.13% to $1.1857.

(Additional reporting by Noel Randewich; Editing by Dan Grebler and Sonya Hepinstall)


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