US stocks ended with modest gains, but pulled back from intraday highs, aided by positive US economic data and reported progress in talks between Greece and its international lenders.
Greece’s international lenders gave the biggest signal yet that they were willing to compromise to avert a default. This happened despite reports that Athens was considering an IMF loan repayment due this week.
The S&P 500 benchmark index ended 4.47 points or 0.2% higher at 2114.47 with a slump in utility shares limiting the gains.
The Dow Jones Industrial Average closed 64.33 points or 0.4% to 18,047.96 while the technology heavy Nasdaq Composite ended the day 22.71 points or 0.5% higher at 5099.23.
Trading volumes were however lower than usual with traders awaiting the non-farm payrolls report.
“We expect the nonfarm payrolls in the region of more than 200,000, which would be good but not great. We also take the 5.4% unemployment rate with a grain of salt, as there are still too many underemployed and part-time workers, which suggest the labor market is not tightening fast enough.” Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, told Market Watch.
“But the Federal Reserve is still likely to raise interest rates this year and we think it will be in September,”
Also aiding the rally however was a selloff in bonds all over the world with 10 year old yield in Germany jumping as high as 0.8887 percent a day after recording their biggest one day jump in more than 3 years.
The selloff was triggered by the president of the European Central Bank Mauro Draghi that the ECHB’s bond buying program would run to its end as the stimulus strategies starred showing indications of boosting growth.
A rise in the US bond yield helped lift financial shares in the US.
“The biggest positive about the bond market weakness is that yields going higher is a net positive for all of the financials. Higher yields on fixed income translate into higher rates and that increases the net interest margin for financials,” Michael James, managing director of equity trading at Wedbush Securities in Los Angeles told Reuters.
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