Wall Street’s tax rotation pauses, tech shares rebound from selling
NEW YORK (Reuters) – Copper prices fell steeply to their lowest point in two months on Tuesday, while US technology stocks rebounded following a rotation away from the high-flying group that stemmed from improving prospects for a tax-cut plan.
Copper lost 3.90% to $6,560 a ton as inventories rose and was on pace for its biggest single-session decline in more than two years. Other metals, such as nickel and zinc, also fell.
Copper prices were also pressured by recent strength in the dollar, with many commodities denominated in the US currency.
Copper is a signal of global demand, and Tuesday’s decline comes at a time when other data points to economic strength, said William Delwiche, an investment strategist at Baird in Milwaukee.
“Today is copper traders questioning whether or not global growth is as strong as they were thinking,” he said. “They are looking at the inability of bond yields to make a sustained move higher and causing them to question the strength in the economy.”
In late-morning trading on Wall Street, the Dow Jones Industrial Average rose 25.74 points, or 0.11%, to 24,315.79, the S&P 500 gained 8.58 points, or 0.33%, to 2,648.02, and the Nasdaq Composite added 58.61 points, or 0.87%, to 6,833.97.
The S&P technology sector, which has lost momentum in recent days, rose 1.3% and was the best-performing major group.
Investors have been selling technology shares recently, bidding up prices for banks, telecoms and transports in a rotation into groups expected to particularly benefit from passage of US bill designed to slash corporate taxes.
The Republican-controlled US House of Representatives voted on Monday to go to conference on tax legislation with the Senate, moving Congress another step closer to a final bill.
In Europe, the pan-European FTSEurofirst 300 index lost 0.06%.
MSCI’s gauge of stocks across the globe gained 0.08%.
The dollar rose for a second straight session as the currency continued to benefit from optimism surrounding US tax reform.
The dollar index rose 0.18%, with the euro down 0.32% to $1.1826.
Short-dated US Treasury yields rose to their highest in more than eight years on tax-reform optimism and growing expectations for the Federal Reserve to raise interest rates several times next year.
“Fed fund futures and euro dollar [investors] did not believe the Fed, even though they said three to four hikes,” Evercore ISI strategist Stan Shipley said. “I think they’re looking at the current data, tax reform and oil prices and thinking, ‘Oh the Fed may have it right.’”
Benchmark 10-year notes last fell 6/32 in price to yield 2.383%, from 2.363% late on Monday.
US crude fell 0.16% to $57.38 per barrel, and Brent was last at $62.55, up 0.16% on the day.
Spot gold dropped 1.0% to $1,263.73 an ounce.