US stocks fluctuate, dollar climbs as oil dips

Bloomberg

US stocks edged lower, while the dollar strengthened versus the yen in listless trading before Federal Reserve Chair Janet Yellen testifies to Congress this week and companies begin to deliver second-quarter results. The S&P 500 Index was little changed in weak trading, while technology shares retreated before banks kick off earnings. European equities declined as energy producers slid when crude briefly slumped below $44 a barrel on speculation production caps are being breached. Petro-currencies including Russia’s ruble and Norway’s krone led declines. Bonds extended losses triggered by last week’s hawkish rhetoric from central bankers.
The reversal has exposed mounting doubt over a risk rally that has taken stocks to all-time highs. Analysts have started to cut their forecasts for company earnings amid concern valuations are elevated. Central banks are moving towards tighter policy after almost a decade of stimulus even though macro data show a mixed outlook, creating concern they could sap a global growth recovery.
“More hawkish comments out of key central banks in the
final weeks of the second quarter had many in the markets questioning whether the win-win outcome for investors can really continue,” strategists at JPMorgan Asset Management said in a research note. “Now, especially, investors need to decide which is more
important for asset markets: monetary policy or the underlying state of the recovery.”
PepsiCo Inc. is due to report second-quarter results on Tuesday and JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. on Friday. Federal Reserve Chair Janet Yellen’s testimony before Congress will be in focus later this week as investors look for guidance on when the US central bank could start reducing its balance sheet. The UK government is due to publish it’s Repeal Bill on membership of the European Union this week. The Bank of Canada announces its interest-rate decision tomorrow, with a hike expected by most analysts. The S&P 500 fell less than one point to 2,426.44 as of 9:31 a.m. in New York. The Euro Stoxx 50 Index lost 0.4 percent following a 0.4 percent gain Monday. The MSCI Emerging Market Index jumped 0.7 percent. West Texas Intermediate crude dropped 1 percent to $43.95 a barrel before US government data forecast to show crude stockpiles extended declines. Gold was down 0.3 percent to $1,210.51 an ounce, near the lowest since March on expectations of tighter monetary policy.