Wall Street indexes hit record highs as investors focus on US policy
NEW YORK (Reuters) – Wall Street hit record highs and the dollar edged up on Tuesday, as traders monitored comments from Federal Reserve chairman nominee Jerome Powell and waited for progress on US tax reform.
The US Treasury yield curve steepened after hitting its flattest level in a decade, in what analysts viewed as a much-needed reprieve from months of flattening.
The major US stock indexes rose and the S&P hit a session high during the broadcast of Powell’s confirmation hearing, with their biggest boost coming from financial stocks.
“For the most part, his prepared remarks painted a similar picture to the outgoing Chair Janet Yellen’s monetary-policy strategy,” said Minh Trang, a senior currency trader at Silicon Valley Bank in Santa Clara, California. “What he is trying to convey is that there is going to be consistency in the transition.”
Powell told the hearing that the best way to sustain the US economic recovery would be to continue on path of gradual rate increases.
In early afternoon trading, the Dow Jones Industrial Average rose 133.43 points, or 0.57%, to 23,714.21, the S&P 500 gained 13.52 points, or 0.52%, to 2,614.94, and the Nasdaq Composite added 17.73 points, or 0.26%, to 6,896.25.
European shares rose, supported by consumer staples, as Anglo-Dutch Unilever said it favored a single base, and by oil and gas stocks after Royal Dutch Shell canceled an austerity dividend.
The pan-European FTSEurofirst 300 index rose 0.63%, and MSCI’s gauge of stocks across the globe gained 0.31%.
The dollar index rose 0.25%, with the euro down 0.16% to $1.1877.
Hopes for US tax cuts helped the greenback, as US President Donald Trump tweeted that the plans were “coming along very well.” However, Trump’s drive for tax reform faced new drama in the Senate, where two Republican lawmakers demanded changes in exchange for their help in moving the measure forward ahead of a possible vote as early as Thursday.
Meanwhile, the British pound slipped from an almost two-month high against the dollar, as Brexit-related doubts began to re-exert their grip on the UK currency.
Sterling dipped 0.7% to $1.3219, which would be its sharpest one-day percentage decline since November 2, even after the Bank of England said UK banks could handle a bad Brexit and after the apparent aversion of an Irish political crisis that had threatened to derail a Brexit summit.
“Investors are growing more nervous about possible delays to the Brexit negotiations by the issue of the Northern Ireland-Republic of Ireland border,” Commonwealth Foreign Exchange chief market analyst Omer Esiner said in a note.
Benchmark 10-year notes last rose 4/32 in price to yield 2.3135%, from 2.328% late on Monday.
The 30-year bond last rose 8/32 in price to yield 2.753%, from 2.765% late on Monday.
Oil prices eased on uncertainty over the outcome of an OPEC meeting this week at which an extension to its price-supporting oil output cuts will be discussed.
US crude fell 0.52% to $57.81 per barrel, and Brent was last at $63.38, down 0.72% on the day.