US Stocks Hold Onto Gains, Yields Climb After PMI: Markets Wrap

(Bloomberg) — US equities held onto an advance after data showing growth in US business activity is moderating. Traders are looking for fresh signs on the scope for further easing after the Federal Reserve’s half a percentage point interest-rate cut last week.

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The S&P 500 edged 0.2% higher, trading in a narrow range amid comments from Fed officials on Monday. Among individual movers, shares of Intel Corp. gained 2.3% after Apollo Global Management Inc. was said to have offered to make a multibillion-dollar investment in the chipmaker. Constellation Energy Corp. led power companies higher after its deal with Microsoft Corp. was well received by analysts.

US business activity expanded at a slightly slower pace in early September, according to data released Monday, while expectations deteriorated and a gauge of prices received climbed to a six-month high.

Minneapolis Fed President Neel Kashkari signaled he backs lowering interest rates by another half percentage point by year end in an essay pointing to a weakening labor market and detailing his support for the central bank’s outsize cut.

Atlanta Fed President Raphael Bostic said that starting the central bank’s cutting cycle with a large step would help bring interest rates closer to neutral levels, but officials should not commit to a cadence of outsize moves. Further out this week, investors await the Fed’s preferred price metric and data on US personal spending, due on Friday.

The US dollar creeped higher, while policy-sensitive two-year Treasury yields climbed.

“With the Fed’s first rate cut since 2020 in the history books, many investors may be thinking, ‘Now what?’,” said Chris Larkin at E*Trade from Morgan Stanley. “That will keep the spotlight on economic growth, especially the jobs market.”

In Europe, meanwhile, traders were digesting manufacturing data that came in worse than expected, spurring wagers on more aggressive rate cuts from the European Central Bank. The euro slumped while European stocks edged higher. Weak PMI data for France and Germany on Monday was followed by numbers that showed the euro-area’s private-sector economy shrank for the first time since March.

The common currency weakened as much as 0.7% against the dollar.

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“The market is almost demanding a more aggressive rate cut, especially after what we have seen the Fed has done,” Marija Veitmane, senior multi-asset strategist at State Street, said on Bloomberg Television. The ECB “is definitely behind the curve,” she said.

French government bonds lagged peers after a new French cabinet that is a patchwork of conservatives and centrists was named late Saturday. Investors are concerned that were the government to collapse, it would jeopardize the administration’s ability to pass a budget through parliament over the coming weeks.

Corporate Highlights:

Apollo Global Management Inc. has offered to make a multibillion-dollar investment in Intel Corp., according to people familiar with the matter, in a move that would be a vote of confidence in the chipmaker’s turnaround strategy.

Brookfield Asset Management has raised an initial $2.4 billion for a fund dedicated to investing in clean energy and transition assets in emerging markets, about halfway to its goal.

Palantir Technologies Inc.’s co-founder and chief executive officer Alex Karp, has a love-hate relationship with Wall Street. He’s said that analysts don’t understand the company and that he prefers Palantir’s loyal army of retail investors.

StandardAero Inc. is seeking to raise $1.1 billion in its initial public offering, after its backer Carlyle Group Inc. had decided to pursue a listing for the aircraft maintenance services provider rather than a sale.

BNP Paribas SA agreed to buy HSBC Holdings Plc private banking operations in Germany, as the French lender seeks a bigger slice of the nation’s growing market for wealth management.

UniCredit SpA Chief Executive Officer Andrea Orcel moved to more than double the lender’s stake in Commerzbank AG, in a dramatic development that’s likely to escalate tensions with the German government.

Elsewhere, Asian markets were lifted by speculation China is close to announcing fresh stimulus, after a cut to a short-term policy rate and a rare economic briefing scheduled for Tuesday.

“The start of the Fed easing cycle should lead to more stimulus from China, particularly as the 5% growth target seems difficult to achieve,” Mohit Kumar, chief strategist and economist for Europe at Jefferies International Ltd., wrote in a note. The “stimulus measures should also be beneficial for Europe.”

Gold touched a record high earlier before paring the move, as the worsening strife in the Middle East fueled wagers on further price gains in the metal due to its haven status. US energy stocks climbed.

Key events this week:

• Australia rate decision, Tuesday

• Japan Jibun Bank Manufacturing PMI, Services PMI, Tuesday

• Mexico CPI, Tuesday

• Bank of Canada Governor Tiff Macklem speaks, Tuesday

• Australia CPI, Wednesday

• China medium-term lending facility rate, Wednesday

• Sweden rate decision, Wednesday

• Switzerland rate decision, Thursday

• ECB President Christine Lagarde speaks, Thursday

• US jobless claims, durable goods, revised GDP, Thursday

• Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday

• Mexico rate decision, Thursday

• Japan Tokyo CPI, Friday

• China industrial profits, Friday

• Eurozone consumer confidence, Friday

• US PCE, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.2% as of 9:50 a.m. New York time

• The Nasdaq 100 rose 0.4%

• The Dow Jones Industrial Average was little changed

• The Stoxx Europe 600 rose 0.4%

• The MSCI World Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.3% to $1.1127

• The British pound was little changed at $1.3326

• The Japanese yen was little changed at 143.98 per dollar

Cryptocurrencies

• Bitcoin was little changed at $63,246.26

• Ether rose 2.9% to $2,648.44

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.77%

• Germany’s 10-year yield declined three basis points to 2.18%

• Britain’s 10-year yield advanced two basis points to 3.93%

Commodities

• West Texas Intermediate crude rose 0.5% to $71.36 a barrel

• Spot gold rose 0.4% to $2,631.92 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Margaryta Kirakosian, Alex Nicholson, John Viljoen, Catherine Bosley and Alice Gledhill.

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