Treasuries Fall on ADP Report as Stocks Fluctuate; Copper Gains
Washington (July 2) Treasuries fell after a private report showed U.S. employers added more workers, while stocks fluctuated near records. Emerging-market equities climbed to a 13-month high and copper gained.
The Standard & Poor’s 500 Index (SPX) rose less than 0.1 percent at 10:18 a.m. in New York after the gauge closed at a record. The Dow Jones Industrial Average came within two points of 17,000 in intraday trading yesterday. The Stoxx Europe 600 Index added 0.1 percent, and the MSCI Emerging Markets Index advanced 0.8 percent. The 10-year Treasury yield rose four basis points to 2.60 percent. Copper climbed to a 17-week high.
U.S. companies added 281,000 workers to their payrolls in June, figures from the ADP Research Institute showed today, before the Labor Department’s monthly job’s report tomorrow. A gauge of global equities closed at an all-time high yesterday after data showed manufacturing activity expanding in countries from China to the U.K. and the U.S. Federal Reserve Chair Janet Yellen is set to speak at the International Monetary Fund today in Washington.
“The ADP data is very strong,” Jim McDonald, chief investment strategist at Chicago-based Northern Trust Corp., said by phone. His firm manages about $915 billion of assets. “It’s another sign that we’re regaining some momentum in the latter part of the year. People are probably not going to want to have big bets on ahead of the payroll number.”
Labor Market
Data from employment to housing is fueling confidence that the world’s largest economy is rebounding after the worst contraction in gross domestic product since 2009.
Yellen said last month that accommodative monetary policy, rising property and equity prices and the improving global economy should lead to above-trend growth. She emphasized the need to put more Americans back to work and downplayed concerns about asset-price bubbles and incipient inflation.
The ADP data today indicated staffing at companies climbed in June by the most since November 2012, boosting bets growth is heating up enough for the Fed to consider raising interest rates. The yield on benchmark 10-year Treasuries touched the highest since June 24 today. The average yield for the past decade is 3.41 percent.
A separate release showed factory orders in the world’s biggest economy fell 0.5 percent in May, following a 0.7 percent gain in April, according to the Census Bureau.
“Markets are enjoying what might be the last element of very accommodative monetary policy from the Fed and other central banks,” Peter Dixon, a London-based global equities economist at Commerzbank AG, said by telephone. “There’s nothing immediately out there that’s going to derail the economic outlook.”
Record Levels
The S&P 500 rallied 0.8 percent to an all-time high yesterday, after capping a sixth straight quarterly advance, as U.S. equities extended a rebound from the selloff that started with biotechnology and small-cap stocks about three months ago.
The Dow average climbed 0.8 percent to 16,956.07 yesterday, while the Dow Jones Transportation Average gained 0.7 percent to 8,261.70, the first time in almost a month that both indexes reached records on the same day, data compiled by Bloomberg show. The Russell 2000 Index of small companies touched an intraday record.
“A little bit of that strong momentum from yesterday is slowing,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said by phone. “I think we got a nice start to the third quarter here yesterday and it’s just a matter of the fact that after you have those huge days, people try and take some short term profit.”
Source: Bloomberg
