Stocks buoyed by tech bounce; Dudley remarks lift Treasury yields

Pic Reuters

Pic Reuters

US stocks rose on Monday, with the S&P 500 and the Dow hitting record highs with growth sectors such as technology in favor again as investors appeared to regain confidence in the economy after upbeat comments from Federal Reserve officials. It hardly budged on news that a van ploughed into worshippers leaving a London mosque on Monday, killing at least one person and injuring several.

It is expected to remain vulnerable to bouts of volatility in coming months as negotiations proceed on Britain's divorce from European Union.

The UK ruling Conservative Party's loss of its parliament majority earlier this month raised speculation of a drift toward a "soft Brexit", which had supported the pound.

"Some of it is folks taking a second look at names that may have been unduly punished in the rotation out of tech that started about ten days ago", said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas in NY.

"While medium-term GBP appreciation is still likely, the tail risks of a no-deal or disorderly Brexit scenarios have increased, and should weigh on GBP", wrote currency strategists at Barclays.

The Dow Jones Industrial Average rose 108.41 points, or 0.51 percent, to 21,492.69, the S&P 500 gained 16.04 points, or 0.66 percent, to 2,449.19 and the Nasdaq Composite added 76.13 points, or 1.24 percent, to 6,227.89.

There was no discernible boost for the single currency from the landslide victory of French President Emmanuel Macron's government in parliamentary elections on Sunday.

The dollar index, tracking the greenback against a basket of key currencies, rose 0.37 percent, with the euro down 0.44 percent to $1.1148.

"From a technical standpoint you know there are throngs of investors probably sitting on the sidelines watching that tech rally, wanting to be part of it", said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

The latest data recorded a decline in Exchange Traded Funds gold holdings following the Fed rate hike which suggests a cooling of investor interest in gold.

"If we were not to withdraw accommodation, the risk would be that the economy would crash to a very, very low unemployment rate, and generate inflation", Mr Dudley said."Then the risk would be that we would have to slam on the brakes and the next stop would be a recession".

"My view is that Dudley won't sound too dovish, and thus allow the dollar's gradual rise to resume". The EUR/JPY was higher at 124.2499 Yen, a gain of 0.33%; the pair's range for the session is from a trough of 124.0100 Yen to a peak of 124.5020 Yen.

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