Stocks edge up, Treasury yields slip, China ETFs gain

Choppiness is the only word that really fits today’s market performance with the tech indexes spending much of the day in the red, though closing modestly in the black. The Dow fared better gaining 141 by close but not before going through dozens of peaks and valleys. For the second day, investors are struggling with the opposing questions of rate cuts vs growth, now wondering whether the “soft landing” scenario is even relevant anymore or whether we’re instead heading to a “no landing” future with even acceleration. 

Mixed signals are seen from the Fed with Cleveland Prez Mester saying today there could be cuts but passing on providing hints on timing. There’s also concern about the failing Chinese stock market with the government now stepping in to buy index funds to bolster things.  Volume came in at about 11.4 billion. 

Stocks edge up, Treasury yields slip, China ETFs gain

By Caroline Valetkevitch

Tue February 6, 2024  5:31 PM

DJ: 38,380.12  -274.30         NAS: 15,597.68  -31.28        S&P: 4,942.81  -15.80      2/5

DJ: 38,521.36  +141.24        NAS: 15,609.00  +11.32       S&P: 4,954.23  +11.42     2/6

NEW YORK, Feb 6 (Reuters) - Global stock indexes edged up on Tuesday while U.S. Treasury yields eased as investors looked for more clues on how soon the Federal Reserve may start cutting interest rates.  The U.S. dollar weakened slightly but stayed close to its highest level in nearly three months in the wake of recent strong economic data and the Fed's recent hawkish stance on rates.  Cleveland Fed President Loretta Mester said on Tuesday that if the U.S. economy performs as she expects, it could open the door to rate cuts. But Mester said she was not ready to provide timing for easier policy amid ongoing inflation uncertainty.  Traders have pushed back expectations of the Fed's first rate cut to May, after previously pricing in a likely rate reduction in March.

"Now traders are wondering if instead of whether we'll get a soft landing or recession, whether we could have no landing or re-acceleration this year," said Matthew Weller, global head of research at FOREX.com.  Investors on Wall Street also digested the latest quarterly results and forecasts from U.S. companies. Shares of chemicals firm DuPont de Nemours (DD.N), opens new tab jumped after it reported upbeat results and announced a $1 billion share-repurchase program.

The Dow Jones Industrial Average (.DJI), opens new tab rose 141.24 points, or 0.37%, to 38,521.36, the S&P 500 (.SPX), opens new tab gained 11.42 points, or 0.23%, to 4,954.23 and the Nasdaq Composite (.IXIC), opens new tab gained 11.32 points, or 0.07%, to 15,609.00.

The MSCI world equity index (.MIWD00000PUS), opens new tab, which tracks shares in 49 nations, gained 0.51%.  Overnight, Beijing ramped up efforts to put a floor under its stock market, boosting Chinese blue-chip stocks (.CSI300), opens new tab more than 3%. In New York trading, the iShares China large-cap exchange-traded fund (FXI.P), opens new tab rallied 5.7% while the Golden Dragon China index (.HXC), opens new tab climbed 5.9%.  The Treasury saw solid demand for an auction of new three-year notes.

Benchmark 10-year notes slipped 7 basis points on the day to 4.096%, after reaching an 11-day high of 4.177% on Monday. Two-year yields fell 6 basis points to 4.412% and are down from a one-month high of 4.483% on Monday.  The dollar index , which measures the U.S. currency against six others, fell 0.24% to 104.19, after touching 104.60 on Monday, its highest since Nov. 14.  The euro was up 0.09% at $1.0751.

A slew of announcements from China's securities regulator, a reported upcoming meeting between President Xi Jinping and financial regulators highlighted the urgency with which Chinese authorities are trying to stem heavy losses in its stock market. State fund Central Huijin Investment also said it has expanded its scope of investment in exchange-traded funds.  China's blue-chip index plunged to a five-year low last week on the back of the country's ailing economy, which had prompted state-backed investors, dubbed the "national team", to step up their buying of blue-chip stock tracking index funds to support the market. 

Per the CBOE, 11.4 billion shares were traded.