Stan Choe
Updated ,first published
US stocks bounced back as both bond yields and bitcoin stabilised.
The S&P 500 rose 0.2 per cent overnight, following its first loss in six days. The Dow Jones Industrial Average added 0.4 per cent, and the Nasdaq composite climbed 0.6 per cent.
The Australian sharemarket is set for a small gain at the open, with futures pointing to a rise of 0.2 per cent. The ASX added 0.2 per cent on Tuesday.
Boeing was one of the strongest forces lifting the US market after it gave an encouraging forecast for how much cash it will produce next year.
MongoDB helped lead the market and jumped 22.2 per cent after the database company delivered stronger results for the latest quarter than analysts expected. United Natural Foods also climbed after reporting a stronger profit than expected, and it rose 4.6 per cent.
They helped offset a 7 per cent drop for Signet Jewellers, which gave a forecast for revenue in the holiday shopping season that fell short of analysts’ expectations. The jeweller said it’s expecting “a measured consumer environment.”
Another potential warning about US shoppers’ strength came from the chief financial officer of Procter & Gamble, the giant behind Tide detergent, Ivory soap and Oral-B toothbrushes. Andre Schulten said the landscape for US consumers is “volatile” at the moment, though still within the company’s expectations. Procter & Gamble fell 1.1 per cent.
The US economy has been holding up overall, but that’s masking sharp divisions beneath the surface. Lower-income households are struggling with inflation that’s still higher than anyone would like. Richer households, meanwhile, are benefiting from a stock market that’s within 1 per cent of its all-time high set in late October.
In the bond market, Treasury yields were calming following their jumps the day before. The 10-year yield was holding at 4.09 per cent, where it was late on Monday, while the two-year yield eased to 3.51 per cent from 3.54 per cent.
Higher yields can drag prices lower for all kinds of investments, and those seen as the most expensive can take the biggest hit.
Bitcoin, which tumbled below $US85,000 on Monday as bond yields worldwide marched higher, pulled back above $US90,000. That helped stocks of several crypto-related companies bounce back from sharp slides on Monday.
Strategy climbed 5.8 per cent and more than made up for Monday’s loss. Coinbase Global gained 1.3 per cent, and Robinhood Markets rose 2.2 per cent to recover much of their drops from the day before.
Monday’s climb in yields came after the Bank of Japan hinted that it may raise interest rates there soon. But hopes are still high that the Federal Reserve will cut its main interest rate when it meets in Washington next week.
What comes after that for the Fed, though, is uncertain. The Fed has already cut its overnight interest rate twice this year in hopes of shoring up a slowing job market. But lower rates can fan inflation higher, and inflation has stubbornly remained above the Fed’s 2 per cent target.
Complicating things is the US government’s earlier shutdown, which delayed reports on the job market and other areas of the economy.
Investment giant Vanguard said its data suggest the US labor market “remains stable but is still soft compared with last year.”
Overall hiring numbers are slower on a month-to-month basis. But fewer workers are going after job openings because of weaker immigration and an uptick in retirements, according to Adam Schickling, a senior US economist at Vanguard. That in turn means hiring doesn’t need to be as strong in the past to keep the unemployment rate steady.
In other international markets, indexes moved modestly across much of Europe and Asia.
South Korea’s Kospi was an outlier and jumped 1.9 per cent for one of the world’s bigger moves. Tech stocks helped lead the way, including rises of 2.6 per cent for Samsung Electronics and 3.7 per cent for chip company SK Hynix.
AP
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