(Bloomberg) — Stocks bounced back after selloff that erased about $6.5 trillion from global equity markets in the past few weeks.Equities advanced after the worst S&P 500 rout in almost two years. Buying US shares after a slump of the scale witnessed over the past month has usually been profitable, according to Goldman Sachs Group Inc.’s. Since 1980, the US benchmark gauge has generated a median return of 6% in the three months that followed a 5% decline from a recent high.
US Treasuries fell as demand for haven assets waned globally, with the market now turning to a $58 billion auction as the next test of investor appetite. Traders are also rowing back on expectations of deep cuts from the Federal Reserve. Swaps point to about 110 basis points of easing through this year, compared to as much as 150 basis points on Monday.
“The Fed worries about systemic risk in financial markets, not disappointed investors,” said David Donabedian at CIBC Private Wealth US. “Thus the Fed is unlikely to change its course of action due to a stock market correction. Are we headed for a near term recession, or are markets overreacting? We believe slower growth is unfolding, not a recession.”
The S&P 500 climbed 0.4%. Caterpillar Inc. said it expects its annual profit will be higher than previously projected. Uber Technologies Inc. reported better-than-expected orders in the second quarter. Yum! Brands Inc. posted weaker-than-anticipated sales.
Treasury 10-year yields advanced two basis points to 3.81%. The dollar rose 0.3%.
Key events this week:
- China trade, forex reserves, Wednesday
- US consumer credit, Wednesday
- Germany industrial production, Thursday
- US initial jobless claims, Thursday
- Fed’s Thomas Barkin speaks, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.4% as of 9:30 a.m. New York time
- The Nasdaq 100 rose 0.5%
- The Dow Jones Industrial Average fell 0.1%
- The Stoxx Europe 600 fell 0.4%
- The MSCI World Index rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.3% to $1.0918
- The British pound fell 0.7% to $1.2688
- The Japanese yen fell 0.1% to 144.33 per dollar
Cryptocurrencies
- Bitcoin rose 1.6% to $55,281.61
- Ether rose 1.1% to $2,463.31
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.81%
- Germany’s 10-year yield declined five basis points to 2.14%
- Britain’s 10-year yield was little changed at 3.86%
Commodities
- West Texas Intermediate crude fell 0.9% to $72.29 a barrel
- Spot gold fell 0.7% to $2,394.21 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Robert Brand and Aya Wagatsuma.
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