US STOCKS-Wall Street falls on Syria concerns, interest rate worries - Reuters News
12-Apr-2018 04:40:21 AM
- Trump's missile warning to Russia raises conflict fears
- Syria tensions lift oil prices, boosting energy stocks
- Fastenal leads S&P 500 in percentage losses on earnings miss
- Indexes down: Dow 0.9 pct, S&P 0.55 pct, Nasdaq 0.36 pct
Updates to close
By April Joyner
NEW YORK, April 11 (Reuters) - Wall Street stocks fell on Wednesday as possible U.S. military action against Syria stoked investor concerns about geopolitical risk to the American economy and minutes from the Federal Open Market Committee sparked worries about a more hawkish view on interest-rate increases.
The decline followed two days of gains, driven by easing concerns about trade tensions between the United States and China.
On Wednesday, U.S. President Donald Trump warned Russia of imminent military action in Syria, declaring missiles "will be coming."
The rising tensions sent oil prices surging, boosting energy stocks 1 percent. But the risk-off sentiment weighed on Treasury yields, pushing financial stocks down 1.3 percent.
"There's general nervousness about what might happen with any strikes and the potential escalation of tensions with Russia," said Anwiti Bahuguna, senior portfolio manager at Columbia Threadneedle Investments in Boston.
The major Wall Street indexes edged even lower after minutes from the Federal Open Market Committee showed concern among a few of its members that rising inflation might require a faster pace of interest rate hikes than anticipated.
Members of the Federal Reserve voted unanimously to raise borrowing costs by a quarter percentage point and expressed confidence that the economy would strengthen and inflation would rise in coming months.
"The minutes were modestly negative," said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. "People had been speculating that due to all the turbulence in the market because of geopolitical uncertainties that the Fed might consider pausing or slowing down the interest rate increases."
The Dow Jones Industrial Average fell 218.55 points, or 0.9 percent, to 24,189.45, the S&P 500 lost 14.68 points, or 0.55 percent, to 2,642.19 and the Nasdaq Composite dropped 25.28 points, or 0.36 percent, to 7,069.03.
Investors said they are looking to earnings season to provide a sustained boost to U.S. stocks. Banks JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co will report quarterly results on Friday.
Analysts expect quarterly profits for S&P 500 companies to rise 18.5 percent from a year ago, which would be the biggest gain in seven years, according to Thomson Reuters I/B/E/S.
Industrial distributor Fastenal fell 6.2 percent after its earnings missed expectations. The stock was the biggest decliner on the S&P, followed by industry peer WW Grainger's 4.4 percent drop.
Advancing issues outnumbered declining ones on the NYSE by a 1.03-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored decliners.
The S&P 500 posted six new 52-week highs and two new lows; the Nasdaq Composite recorded 46 new highs and 27 new lows.
Volume on U.S. exchanges was 6.04 billion shares, compared with the 7.29 billion-share average for the full session over the last 20 trading days.
(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur and Dan Grebler)
US STOCKS-Wall Street moves lower after release of Fed minutes - Reuters News
12-Apr-2018 03:24:56 AM
- Trump's missile warning to Russia raises conflict fears
- Syria tensions lift oil prices, boosting energy stocks
- Facebook up 1 pct, reversing course as Zuckerberg speaks
- Indexes: Dow down 1 pct, S&P dips 0.6 pct, Nasdaq drops 0.4 pct
Updates to late afternoon, changes byline, adds NEW YORK dateline
By April Joyner
NEW YORK, April 11 (Reuters) - U.S. stocks added to losses on Wednesday after the release of minutes from the Federal Open Market Committee showed some concern that rising inflation might require a faster pace of interest rate hikes than anticipated.
Members of the Federal Reserve voted unanimously to raise borrowing costs by a quarter percentage point and expressed confidence that the economy would strengthen and inflation would rise in coming months.
After the FOMC minutes were released, all three major Wall Street indexes moved lower, indicating investor concerns about rising interest rates.
"The minutes were modestly negative," said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. "People had been speculating that due to all the turbulence in the market because of geopolitical uncertainties that the Fed might consider pausing or slowing down the interest rate increases."
Earlier in the day, political headlines had weighed on U.S. stocks.
U.S. President Donald Trump warned Russia of imminent military action in Syria, declaring missiles "will be coming."
The rising tensions sent oil prices surging, boosting energy stocks nearly 1 percent. But the risk-off sentiment weighed on Treasury yields, pushing financial stocks down 1.4 percent.
The Dow Jones Industrial Average fell 231.41 points, or 0.95 percent, to 24,176.59, the S&P 500 lost 15.01 points, or 0.56 percent, to 2,641.86 and the Nasdaq Composite dropped 26.41 points, or 0.37 percent, to 7,067.90.
Facebook shares added the most to the S&P, gaining 1.2 percent as Chief Executive Mark Zuckerberg testified before Congress for a second day.
The shares were down about 0.5 percent at the start of Zuckerberg's testimony, but they reversed course as he pushed back on Congress members' suggestions that users do not have enough control of their data.
Industrial distributor Fastenal fell 6.4 percent after its earnings missed expectations. The stock was the biggest decliner on the S&P, followed by peer WW Grainger's 4.2 percent drop.
Declining issues outnumbered advancing ones on the NYSE by a 1.03-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored decliners.
The S&P 500 posted 6 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 43 new highs and 23 new lows.
(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur and Dan Grebler)
FOREX-Syria conflict fears weigh on dollar; Fed minutes support - Reuters News
12-Apr-2018 03:36:44 AM
- Dollar index slips to two-week low
- Fed sees strengthening U.S. economy, inflation -minutes
Updates market action, comments
By Saqib Iqbal Ahmed
NEW YORK, April 11 (Reuters) - The U.S. dollar slipped against the Japanese yen on Wednesday as uncertainty over possible Western military action against Syria fed risk aversion even as fears of a trade war between the United States and China faded.
The dollar was down 0.38 percent at 106.78 yen, after slipping as low as 106.65 yen.
U.S. President Donald Trump warned Russia of imminent military action in Syria over a suspected poison gas attack, declaring that missiles "will be coming" and lambasting Moscow for standing by Syrian President Bashar al-Assad.
Many of the world's main stock markets were back in the red after two days of gains, boosting safety plays.
"It's a risk-off kind of day," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California, referring to increased geopolitical tensions.
"The yen typically is a flight to safety," Trang said.
When geopolitics roil financial markets, the yen tends to rise on the view that investors from Japan, the world's biggest creditor nation, will repatriate funds.
Syria concerns overshadowed easing U.S.-China trade tensions a day after Beijing promised to open its economy and lower import tariffs on products such as cars.
The dollar index, which measures the greenback against a basket of six major currencies, fell to a two-week low of 89.355. But it rebounded after minutes of the U.S. Federal Reserve's last policy meeting showed policymakers felt that the U.S. economy would firm further and that inflation would rise in the coming months.
The index was down 0.04 percent at 89.547.
"These minutes have a hawkish lean," said Collin Martin, director for fixed income at the Schwab Center for Financial Research, in New York.
"To us, the Fed will continue to raise rates at a gradual pace here. We will see two or three more rate hikes this year," he said.
Earlier on Wednesday, data showed U.S. core Consumer Price Index rose 2.1 percent in March, the largest advance since February 2017, after increasing 1.8 percent in February.
"The inflation numbers today and yesterday were actually pretty supportive of the dollar," said Silicon Valley Bank's Trang.
The growing tensions between the United States and Russia over new punitive sanctions and the conflict in Syria sent the ruble to its lowest levels since 2016, before the Russian currency recovered some ground. The greenback was down 0.68 percent against the ruble.
The Hong Kong dollar fell to a 33-year low on Wednesday, inching closer to the lower end of the monetary authority's targeted trading band as the interest rate gap between U.S. dollar and Hong Kong dollar widened further.
(Additional reporting by Richard Leong in New York; Editing by Dan Grebler)
TREASURIES-Yields retreat on Syria fears; curve flattest in 10 years - Reuters News
12-Apr-2018 03:49:51 AM
- U.S. CPI falls, but core rises; neutral impact on yields
- Possible U.S. action in Syria weighs on yields
- U.S. 10-year note auction shows tepid demand
- Fed minutes affirms gradual rate hike path
Adds comment, results of 10-year auction; updates prices, table
By Gertrude Chavez-Dreyfuss
NEW YORK, April 11 (Reuters) - U.S. Treasury yields declined on Wednesday on escalating geopolitical tensions after President Donald Trump warned Russia of imminent military action in Syria over a suspected poison gas attack.
Trump declared on Wednesday that missiles "will be coming," as he lambasted Russia for standing by Syrian President Bashar al-Assad following a suspected gas attack that killed more than 40 people and affected hundreds of others.
U.S. benchmark 10-year note and 30-year bond yields, which move inversely to prices, slid to one-week lows, while 2-year yields slipped after two days of gains.
"This is mostly geopolitical tension," said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco. "There are concerns obviously in the Middle East and what might happen. So risks are certainly higher."
Yields, however, briefly edged higher after modestly hawkish minutes from the Federal Reserve's last policy meeting, as policymakers felt the U.S. economy would firm further and inflation would rise in the coming months.
"These minutes have a hawkish lean," said Collin Martin, senior fixed income research analyst, at Schwab Center for Financial Research in New York. "To us, the Fed will continue to raise rates at a gradual pace."
The U.S. yield curve flattened further on Wednesday, with the gap between U.S. 2-year and 10-year note yields at their narrowest in 10 years. Analysts said that reflected a scenario of a Fed raising interest rates at a time when investors think there is very little inflation in the economy.
Yields also rose after a lackluster U.S. 10-year note auction that drew its lowest demand in nearly 1-1/2 years from so-called "indirect bidders", which include fund managers and foreign central banks.
Action Economics' Rupert noted that demand for Treasuries has been tepid over the last 12 months. This, she said, signifies the fact that the Fed has been raising interest rates and that investors expect more government bond supply on the way to finance the country's budget deficit
In afternoon trading, the U.S. 10-year yields were down at 2.7826 percent, from 2.797 percent late on Tuesday.
U.S. 30-year yields sank to 2.995 percent, from Tuesday's 3.017 percent.
On the front end of the curve, U.S. 2-year yields dipped to 2.311 percent, compared with 2.315 percent on Tuesday.
Earlier data showing a rise in U.S. core inflation for March, which was up 0.2 percent and matched February's increase rise, failed to boost yields, as headline consumer prices fell for the first time in 10 months.
Wednesday, April 11 at 1532 EDT (1932 GMT):
| Price | |||
| US T BONDS JUN8 UScv1 | 146-10/32 | 0-12/32 | |
| 10YR TNotes JUN8 TYcv1 | 120-232/256 | 0-36/256 | |
| Price | Current Yield (pct) | Net Change (bps) | |
| Three-month bills US3MT=RR | 1.7025 | 1.7336 | -0.002 |
| Six-month bills US6MT=RR | 1.885 | 1.9296 | -0.005 |
| Two-year note US2YT=RR | 99-226/256 | 2.3111 | -0.004 |
| Three-year note US3YT=RR | 99-204/256 | 2.4457 | -0.009 |
| Five-year note US5YT=RR | 99-122/256 | 2.6129 | -0.010 |
| Seven-year note US7YT=RR | 99-96/256 | 2.724 | -0.015 |
| 10-year note US10YT=RR | 99-188/256 | 2.7808 | -0.016 |
| 30-year bond US30YT=RR | 100-28/256 | 2.9943 | -0.023 |
| DOLLAR SWAP SPREADS | |||
| Last (bps) | Net Change (bps) | ||
| U.S. 2-year dollar swap spread | 30.75 | 0.75 | |
| U.S. 3-year dollar swap spread | 24.50 | 0.25 | |
| U.S. 5-year dollar swap spread | 13.50 | 0.75 | |
| U.S. 10-year dollar swap spread | 3.50 | 0.50 | |
| U.S. 30-year dollar swap spread | -13.50 | 0.75 |
(Reporting by Gertrude Chavez-Dreyfuss
Editing by Chizu Nomiyama and Susan Thomas)
WRAPUP 3-U.S. consumer prices drop, but core inflation firming - Reuters News
12-Apr-2018 02:49:22 AM
Adds Fed minutes, updates markets
- Consumer price index slips 0.1 percent in March
- CPI increases 2.4 percent year-on-year
- Core CPI rises 0.2 percent; up 2.1 percent year-on-year
By Lucia Mutikani
WASHINGTON, April 11 (Reuters) - U.S. consumer prices fell for the first time in 10 months in March, weighed down by a decline in the cost of gasoline, but underlying inflation continued to firm amid rising prices for healthcare and rental accommodation.
The drop in the headline monthly inflation reading reported by the Labor Department on Wednesday is likely temporary as producer prices increased solidly in March.
In addition, the tightening labor market is expected to start generating significant wage inflation in the second half of the year. As such, many economists believe the Federal Reserve will raise interest rates three more times this year.
The U.S. central bank increased borrowing costs last month and forecast at least two additional rate hikes in 2018.
"U.S. inflation is warming up rather than heating up," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "Still, the upward trend could suffice to nudge the Fed three more times this year."
The Consumer Price Index slipped 0.1 percent last month, the first and largest drop since May 2017, after climbing 0.2 percent in February, the Labor Department said.
In the 12 months through March, the CPI increased 2.4 percent. That was the largest annual gain in a year and followed February's 2.2 percent increase. Annual inflation is rising as the big price declines from last year drop from the calculation.
Excluding the volatile food and energy components, the CPI climbed 0.2 percent, matching February's increase.
The so-called core CPI rose 2.1 percent year-on-year in March, the largest advance since February 2017, after increasing 1.8 percent in February. The annual core CPI also accelerated as the drag from last year's plunge in prices for cellphone service plans dropped out of the calculation.
The core CPI is now well above the 1.8 percent annual average increase over the past 10 years. Economists polled by Reuters had forecast the CPI unchanged in March and the core CPI rising 0.2 percent from the prior month.
The Fed tracks a different index, the personal consumption expenditures price index (PCE) excluding food and energy, which has consistently run below the central bank's 2 percent target since mid-2012.
FLIRTING WITH TARGET
Last year's low prices for cellphone service plans are also expected to fall out of the calculation for March PCE price index data, which is scheduled for release on April 30.
This factor is was also highlighted in minutes of the Fed's March 20-21 policy meeting published on Wednesday.
According to the minutes, "several participants noted that the 12-month PCE price inflation rate would likely shift upward when the March data are released because the effects of the outsized decline in the prices of cell phone service plans in March of last year will drop out of that calculation."
Economists are forecasting the core PCE price index increasing 1.9 percent year-on-year in March after rising 1.6 percent in February.
"This suggests to us that the Fed's preferred core PCE price inflation rate will be running at 2.0 percent by the June report, if not sooner," said John Ryding, chief economist at RDQ Economics in New York.
The dollar was little changed against a basket of currencies while prices for U.S. Treasuries rose. Stocks on Wall Street were mostly down as investors worried about rising tensions between the United States and Russia over a possible U.S. military action against Syria.
Inflation is also expected to get a boost from a $1.5 trillion income tax cut package and increased government spending, as well as a weakening U.S. dollar.
Gasoline prices tumbled 4.9 percent in March, the largest drop since last May, after falling 0.9 percent in February. Food prices edged up 0.1 percent after being unchanged in February.
The core CPI was lifted by rising rents and healthcare costs. Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3 percent last month after climbing 0.2 percent in February.
Healthcare costs shot up 0.4 percent, with prices for hospital care jumping 0.6 percent and the cost of doctor visits rising 0.2 percent. Healthcare costs increased 2.0 percent year-on-year, below the 2.9 percent average annual rate over the past 10 years.
Apparel prices fell 0.6 percent after two straight months of robust gains. There were also declines in the cost of telecommunication, used cars and trucks, tobacco and education.
Prices for new motor vehicles and recreation were unchanged last month.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci and Chizu Nomiyama)
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