US stocks fall as Treasuries, dollar advance; gold retreats

Bloomberg

At the start of a week stuffed with central-bank activity, US equities fell and European stocks drifted following steep share declines in Asia. Treasuries advanced as investors greeted on Monday in a cautious mood.
The S&P 500 fell for a second day after the blow-out jobs report altered market calculus for Federal Reserve rate cuts, though equities came off session lows as energy and consumer shares advanced. Tech shares led decliners. Gold headed for its first gain in three days, while the dollar was little changed.
The main focus for markets looks to be Fed Chairman Jerome Powell, who will testify in Congress just days after the latest payroll report signaled that the American economy remains on track.
US stocks hit a record last week and a bond rally took yields to multiyear lows amid expectations the Fed will lower interest rates by at least a quarter of a percentage point at its July meeting. Joe ‘JJ’ Kinahan, the chief market strategist at TD Ameritrade, sees a high likelihood of a July cut.
“If they don’t do something, it’s going to be mightily disappointing,” he said.
“I think, September, you have high probabilities also — but there may be a little bit of waiting to see what the data says going into September.”
Bets on July Fed easing trimmed post-payrolls report, but a reduction is still seen
The Stoxx Europe 600 Index slipped, with Deutsche Bank AG surrendering earlier gains as traders weighed a plan to cut its workforce by one-fifth. The euro slipped after German industrial-production data saw a slight pick-up in May. Greek bonds rose amid hope a new government elected over the weekend will prove to be market-friendly.
Elsewhere, oil gained amid heightened geopolitical risks in the Middle East. Emerging-market shares were dragged down by the Asia sell-off. Turkey’s lira fell after President Recep Tayyip Erdogan’s shock decision to replace the country’s central bank governor, which has fueled concern the regulator could lower borrowing costs more than expected.
UK Conservative Party members were expected to start voting on Monday to choose Theresa May’s successor. Front-runner Boris Johnson and Jeremy Hunt will appear at events through the week, including a debate on July 9.
Federal Reserve Chairman Jerome Powell testifies before Congress on monetary policy and the state of the US economy on Wednesday (the House of Representatives) and on Thursday (the Senate).
Fed minutes are due on Wednesday, ECB minutes on Thursday. A key measure of US inflation — the core consumer price index, due on Thursday — is expected to have increased 0.2 percent in June from the prior month, while the broader CPI is forecast to remain unchanged.
US producer prices are due on Friday.
The S&P 500 Index decreased 0.4 percent in New York. The Stoxx Europe 600 Index fell 0.1 percent. Germany’s DAX Index dipped 0.4 percent. The MSCI Emerging Market Index fell 1.2 percent, the biggest fall in more than
six weeks.
The Bloomberg Dollar Spot Index gained less than 0.05 percent. The euro fell 0.1 percent to $1.1217, the weakest in almost three weeks. The Japanese yen decreased 0.2 percent to 108.64 per dollar, the weakest in more than five weeks. The Turkish lira declined 1.6 percent to 5.7186 per dollar, the biggest decrease in two months.
The yield on 10-year Treasuries declined one basis point to 2.02percent.