Stocks markets fluctuate, dollar rises amid policy bets

Bloomberg

Investors turned attention to Washington to gauge the prospects for sweeping policy changes a day after the Federal Reserve roiled markets with talk of shrinking its balance sheet.
The S&P 500 Index fluctuated as a rally in crude boosted energy shares, while banks stumbled after White House economic adviser Gary Cohn was said to support separating their business lines. The dollar rose as Republican Freedom Caucus leader Mark Meadows suggested tax reform can get done in August. The euro slipped as Mario Draghi reaffirmed he is in no hurry to scale back stimulus. Treasury yields fell amid speculation any balance-sheet reduction could damp the need for rate hikes.
The Trump administration has so far been unable to enact the policies investors have bet will accelerate economic growth, from cutting taxes to boosting spending. Meadows’s comments on taxes come a day after House Speaker Paul Ryan played down the chances for a vote on a revised health-care bill this week, and said tax reform could take longer, according to Reuters. The president is meeting with his Chinese counterpart, with trade and currency valuations possibly up for discussion.
The jobless claims data come after a private report showed a surge in hiring last month as investors await Friday’s government reading for clues on the strength of the world’s largest economy. Fed minutes released on Wednesday showed officials contemplating shrinking the central bank’s $4.5 trillion balance sheet later this year. Draghi underscored Europe’s divergence with the US by re-iterating his commitment to accommodative policy.
What investors will be looking out for: Donald Trump and Xi Jinping begin two-day meeting in Florida today. Analyst roundup: Markets may shrug off Trump-Xi talks Strong private payrolls data in the US have bolstered the outlook for Friday’s government jobs data, providing more evidence that hiring momentum is accelerating in the world’s largest economy. After Draghi, ECB Governing Council members from Ireland and France speak Friday.
The S&P 500 slipped 0.1 percent to 2, 350.95 at 9:46 a.m. in New York. The index dropped 0.3 percent yesterday, erasing a gain of more than 0.5 percent following the Fed’s minutes. Banks slid 0.5 percent. Cohn said he supports a policy that could radically reshape Wall Street’s biggest firms by separating their consumer-lending businesses from their investment banks, said people with direct knowledge of the matter. The Stoxx Europe 600 Index fell 0.1 percent after closing little changed on Wednesday.
The Bloomberg Dollar Spot Index added 0.2 percent at 8:09 a.m. in New York following a 0.1 percent drop Wednesday. The euro traded little changed. The South African rand regained some ground after recent declines to trade 0.1 percent higher. The koruna appreciated 1.1 percent to 26.75 against the euro after the Czech National Bank’s board voted to exit a Swiss-inspired cap on Thursday.