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Stocks climb on aid talks as bonds drop after Fed (nationthailand.com)

Stocks climb on aid talks as bonds drop after Fed

EconDec 17. 2020

By Syndication Washington Post, Bloomberg · Rita Nazareth

Stocks rose on speculation that lawmakers are getting closer to a stimulus deal aimed at reviving the world’s largest economy.

Treasuries fell as the Federal Reserve disappointed some traders who expected changes to the composition of bond purchases.

The S&P 500 climbed after Senate Majority Leader Mitch McConnell, R-Ky., said Congress leaders are still talking about fresh aid and he thinks “we’re gonna get there.” Retailers, technology and financial shares drove the advance in the benchmark gauge of American equities amid thin trading volume. The Nasdaq 100 outperformed, while the Dow Jones industrial average dropped. Treasuries pared some of its losses, with the yield on 10-year notes remaining below 1%. Bitcoin surpassed $20,000 for the first time.

Investors awaited developments on stimulus talks after months of deadlock amid signs the economic recovery is faltering. The deal that lawmakers are attempting to wrap up includes payments to individuals and supplemental unemployment insurance, but excludes liability protections and direct aid for state and local governments, according to two people familiar with the matter. Four people briefed said the virus aid is expected to be less than $900 billion. Fed Chair Jerome Powell said the case for fiscal stimulus is “very, very strong” as the pandemic continues to rage.

“Investors have clearly applauded recent news that legislation is imminent before Congress recesses for the holiday break knowing the Fed will buy every last Treasury that is issued to fund the relief package,” said Danielle DiMartino Booth, chief executive officer of Quill Intelligence in Dallas.

While enthusiasm for individual U.S. stocks is at an extreme among option traders, the same can’t be said for equity indexes. Option-based indicators compiled by Cboe Global Markets show the contrast. The ratio between stock-specific put and call options closed Monday at its lowest level since April 2000, based on 20-day averages. This shows contracts that rise along with specific stocks are much more in demand than usual. Yet the put-call ratio for index options is near a nine-year high, set Nov. 12. Variant Perception Research highlighted the distinction in a Twitter post Tuesday.

These are some of the main moves in markets:

Stocks

– The S&P 500 rose 0.2% as of 4 p.m. EST.

– The Stoxx Europe 600 Index gained 0.8%.

– The MSCI Asia Pacific Index rose 1%.

Currencies

– The Bloomberg Dollar Spot Index fell 0.1%.

– The euro increased 0.4% to $1.2197.

– The Japanese yen appreciated 0.2% to 103.44 per dollar.

Bonds

– The yield on 10-year Treasuries rose one basis point to 0.92%.

– Germany’s 10-year yield gained four basis points to -0.57%.

– Britain’s 10-year yield climbed one basis point to 0.272%.

Commodities

– The Bloomberg Commodity Index rose 0.4%.

– West Texas Intermediate crude climbed 0.5% to $47.85 a barrel.

– Gold rose 0.5% to $1,863.26 an ounce.