Stocks rise amid earnings, dollar advances on economy optimism

Bloomberg

Positive earnings set the tone for equity markets while the dollar traded at a seven-week high as speculation grew the U.S. will raise interest rates this year.
The Dow Jones Industrial Average headed for a ninth straight gain, as Microsoft Corp. jumped after profit topped estimates. Technology companies and carmakers led the Stoxx Europe 600 Index higher as SAP SE and Volkswagen AG beat forecasts. The dollar advanced for a second day against the euro while Treasuries declined. Gold headed for the lowest close this month, while crude slumped below $44 for the first time in two months.
Corporate earnings are helping sustain a run that’s added more than $4.5 trillion to the value of equities worldwide in three weeks.
That along with better-than-estimated U.S. economic data is providing comfort to investors even as concern mounts that the U.K.’s vote to leave the European Union will damp global growth.
Microsoft Corp. and Morgan Stanley were among the latest U.S. companies to report earnings that surpassed
forecasts.
“The earnings bar was low especially for financials, but when you have Microsoft and all these financials trading better it just encourages people,” Michael Block, chief strategist at Rhino Trading Partners LLC in New York, said by phone. “There are a lot of things overhanging. Sentiment is getting better and volume is light, which isn’t great. Slowly, the probability the Fed will hike is
rising.”

Stocks
The S&P 500 Index rose 0.3 percent at 10:23 a.m. in New York, after slipping Tuesday from an all-time high. The Dow average has closed at six straight records during its run that is now nine days long, the best streak since 2013.
Morgan Stanley gained 1.4 percent after its results. The earnings seasons so far has delivered more positive surprises than negative ones.
Analysts see profit at S&P 500 companies falling 5.8 percent in the second quarter, which would mark a fifth consecutive slide, the longest streak since 2009.
The Stoxx 600 added 0.7 percent, with the volume of shares changing hands 36 percent lower than the 30-day average. SAP climbed 5.9 percent and VW added 2.8 percent.
Europe’s benchmark gauge has alternated between gains and losses each day since last week, after a rebound of about 9 percent following the slump after the Brexit vote on June 23.
Investors watching corporate earnings results are also waiting for Thursday’s ECB meeting. Economists in a Bloomberg survey predict rates will remain unchanged.

Currencies
The Bloomberg Dollar Spot Index climbed as much as 0.2 percent to its strongest level since June 1.
A Citigroup gauge that tracks the degree to which American data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve rate increase this year at 44 percent, up from 9 percent at the end of June.
The pound climbed 0.5 percent to $1.3174 as the U.K. jobless rate, as measured by International Labour Organisation standards, dropped to 4.9 percent in the three months through May.
The yuan jumped as much as 0.28 percent to 6.6780 per dollar amid speculation China’s central bank is trying to prevent the currency from weakening beyond 6.70, a threshold that was breached this week for the first time since 2010.
The lira was little changed at 3.0428 per dollar, after earlier sinking as much as 0.7 percent to 3.0623, within 0.5 percent of the all-time low reached in September. The currency is down 4.9 percent, the worst performance among major currencies, since a failed coup attempt on Friday.

Commodities
Raw material prices fell, with the Bloomberg Commodity Index slipping as much as 0.6 percent as industrial metals and gold declined on a stronger dollar. A stronger dollar affects consumption as it reduces demand from other countries.
Oil dropped to the lowest level in more than two months in New York. Crude fell 1.4 percent to $44.03 a barrel, dipping below $44 earlier in the session.
Copper retreated 1.2 percent in London after Chinese data showed output rising in the world’s biggest producer and user of refined metal, underscoring concerns that supply continues to outpace demand. Nickel dropped as much as 2.1 percent, retreating from its highest close since October. Gold futures fell 1.2 percent, heading for the lowest close this month at $1,316.77 an ounce.

Bonds
Treasuries declined, with the 10-year yield rising three basis points to 1.59 percent. The yield has risen from an all-time low of 1.318 percent, set earlier this month, as data showed signs of resilience and boosted higher-yielding
assets.
German 10-year bonds were little changed as an auction of five-year notes fell to the weakest in almost five years. The bund yield was at minus 0.031 percent, up from a record-low minus 0.205 percent earlier in the month. The nation got bids for 3.49 billion euros at the sale on Wednesday, compared with its target of 5 billion euros.