Financials was the best performer on the S&P 500, with Wells Fargo up 2.2 percent. Financial stocks stand to gain the most in a higher interest rate environment.
Advertisement
A report from the U.S. Commerce Department showed consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose for a fourth month in July.
Our expectation is that the hawkish message from Fed Chair Yellen last week will pave the way for a September hike, which should help the Dollars recover some ground. “In light of strong jobs reports over the last two months, the likelihood of an impending rate hike has substantially increased”, said Margaret Yang Yan, market analyst at CMC Markets Singapore. The dollar edged down 0.1 percent to 101.78 yen, moving away from Monday’s high of 102.39, while the euro also inched 0.1 percent lower to 113.87 yen.
Asian shares bounced on Tuesday as doubts the Federal Reserve really would hike rates as soon as September undermined the dollar, while investors continued to count on more policy stimulus elsewhere in the world. “A pickup in consumer spending, on durables especially this time around, gives the Fed another little push”.
Federal fund futures suggest one in three chances of the Fed moving ahead with a rate hike at its September rate-setting meeting in Washington.
Silver fell 0.6 per cent to $18.84 an ounce.
The Dow Jones industrial average was last up 103.58 points, or 0.56 per cent, at 18,498.98.
The commodities-related European oil and gas and basic resources sectors were the only ones in negative territory, down 0.2 percent and 2.1 percent respectively.
The Nasdaq Composite .IXIC was up 20.80 points, or 0.4 percent, at 5,239.72.
Spot gold slipped 0.2 per cent at $1,320.79 per ounce at 0624 GMT. The dollar touched its three-week high today, stock markets remained sluggish and bond yields climbed to their highest since June this year.
Oil prices fell on Monday as the US dollar rose following relatively bullish talk from the US Federal Reserve. A miss now would, paradoxically, be entirely consistent with recent trends and yet also prevent the Fed from hiking this year, if indeed it is putting as much weight on the number this week as comments have indicated.
Selling pressures faded in the afternoon as the USA dollar came off its daily highs to trade flat against a basket of world currencies.
Financial and commodity-sector stocks led the S&P 500 higher in a low-volume session on Monday after consumer spending rose for a fourth straight month, pointing to a pick-up in USA economic growth.
Advertisement
Despite the chorus of hawkish comments from Fed officials in recent days, speculators trimmed bets on the dollar for a fourth straight week in the week ended August 23, reducing net dollar-long positions to their lowest since early July.
