US stocks opened slightly higher, signaling major indices could approach all-time highs ahead of growth data from the services and manufacturing sectors.
The S&P 500 edged up 0.1%, a modest opening move for the broad benchmark. The Dow Jones Industrial Average also gained 0.1%, or 41 points. The technology-driven Nasdaq Composite Index opened 0.2% more after the index closed at a record high.
Stocks and bonds stabilized after the Federal Reserve rocked markets last week by signaling that it could raise interest rates earlier than expected to avoid rising inflation. The rush to adjust portfolios in response to these forecasts has subsided, investors said. Fed Chairman Jerome Powell said on Tuesday he had “a level of confidence” that inflation would come down, reinforcing the idea that it will be several months before the central bank changes its monetary policy.
“We should expect markets to show increased sensitivity to economic data from now on, now that investors have embraced the idea that the monetary cycle is turning,” said Paul O’Connor, head of the multi-asset team at Janus Henderson Investors. “We should expect the markets in the coming months to be more volatile and uncertain than they possibly have been in the past six months.”
The surveys of purchasing managers at U.S. manufacturing and service companies are expected to be released at 9:45 a.m.ET. Analysts polled by FactSet expect them to report that the economy continued to grow at a rapid pace in June.
Parallel surveys in the euro area have shown the fastest rate of growth in business activity in 15 years, after major European economies relaxed restrictions on Covid-19. A sign of inflationary pressure, the prices of goods and services have risen at the fastest rate since records dating back to 2002, said IHS Markit.
In the United States, new home sales data is forecast for 10 hours
The yield on 10-year Treasuries edged up to 1.474%, from 1.471% on Tuesday. Yields move in the opposite direction to bond prices.
Some investors saw the reshuffle that followed the Fed pivot as an opportunity to add positions in value stocks and commodity markets like copper. Sectors such as banking and energy, as well as industrial metals, slipped last week after benefiting from bets on higher growth and inflation for much of the year.
“There has been an overreaction from bond yields and, as a secondary derivative of that, bank stocks,” said Matthew Quaife, head of multi-asset investment management for Asia at Fidelity International. “Growth will be quite strong in the medium term. “
Futures contracts on Brent, the benchmark in international oil markets, rose 1% to $ 74.84 a barrel. Copper futures rose 1.3% to $ 9,390 per metric tonne, recouping some recent losses.
Bitcoin is up more than 3% from its 5 p.m. level on Tuesday at $ 34,056.60. The cryptocurrency briefly fell below $ 30,000 on Tuesday, wiping out all of its gains for 2021.
In overseas markets, the Stoxx Europe 600 index edged down 0.1%, dragged down by losses in travel, entertainment and retail securities. Japan’s Nikkei 225 was relatively stable at the close of trading, while China’s Shanghai Composite edged up 0.3%. Hong Kong’s Hang Seng Index gained 1.8%.
Write to Joe Wallace at [email protected]
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