(Updates with US markets closing, oil settlement prices)
Expectations for a 25 basis point Fed rate hike
The dollar hit a one-month high against the yen
Stocks will see more bank earnings this week
By Chuck Mikolajczak
NEW YORK, April 17 (Reuters) – Global shares were slightly higher on Monday as investors digested another round of corporate earnings, while the dollar and U.S. Treasury yields rose after economic data further bolstered the Fed expectations of an increase in the reserve interest rate. In May.
After last week’s first wave of earnings from banks such as JP Morgan and Wells Fargo were better than expected, investors will now see results from the likes of Goldman Sachs, Morgan Stanley, Bank of America and several regional banks.
Other notable S&P 500 companies scheduled to report earnings this week include Johnson & Johnson, Netflix and Tesla.
On Wall Street, stocks staged a modest late-session rally to close near the day’s highs, but it was held in a narrow trading range. State Street, however, fell 9.18%, its biggest daily percentage drop since March 2020, after releasing quarterly results.
“The market always remains kind of neutral at the start of earnings season because nobody knows what to expect, whether the company will surprise positively or negatively, we just don’t know,” said Tim Grisky, senior portfolio manager. strategist at Ingalls & Snyder in New York, New York.
“The other thing, of course, is the Fed, now expected to hike by 25 basis points in May. We’re obviously very close to the end of the Fed rate hike, that doesn’t mean rates are coming down, that’s why you’re seeing the short end of the curve here in terms of yields.”
The Dow Jones Industrial Average was up 100.71 points, or 0.3%, at 33,987.18, and the S&P 500 was up 13.68 points, or 0.33%, at 4,151.32. and the Nasdaq Composite added 34.26% or 34.228% or 0.1%.
European stocks ended barely lower, snapping a five-session winning streak, with the pan-European STOXX 600 index down 0.01%. The winning streak was the longest for the index in three months.
MSCI’s benchmark of shares globally rose 0.10%.
U.S. yields rose and the dollar strengthened, helped in part by economic data that showed a rebound in factory activity in New York, while confidence among U.S. single-family homebuilders improved for a fourth straight month in April. The data contributed to rising expectations that the Fed will raise interest rates by 25 basis points at its May meeting.
While many believe the Federal Reserve is closer to the end of its rate-hiking cycle than other global central banks, economic data suggest the economy is not yet close to recession, giving the Fed leeway to continue raising rates.
Market expectations for a 25 basis point hike at the May meeting rose to more than 86% from 78% on Friday, according to CME’s FedWatch Tool.
The yield on the 10-year Treasury rose 8 basis points to 3.602%.
The two-year U.S. Treasury yield, which typically moves in line with interest rate expectations, rose 9.3 basis points to 4.196%.
The dollar index increased by 0.413%, and the euro index increased by 0.66% and made 1.0926 dollars.
The Japanese yen eased 0.51% to $134.47 against the dollar, while sterling last traded at $1.2376, down 0.30% for the day. The US dollar rose to a one-month high against the yen as the Bank of Japan is widely expected to maintain loose monetary policy.
A slew of Fed officials are due to speak this week as investors pay close attention to their comments ahead of the central bank’s May 2-3 meeting starting April 22.
Concerns about a stronger dollar and higher exchange rates weighed on crude prices, as U.S. crude fell 2.1% to $80.83 a barrel and Brent settled at $84.76, down 1.8% on the day. decreasing by %.
(Reporting by Chuck Mikolajczak in New York Additional reporting by Sruthi Shankar and Ankika Biswas in Bengaluru and Karen Brettel in New York Editing by Sharon Singleton and Matthew Lewis)