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Stocks end flat, U.S. Treasury yields fall after Powell report
October 19, 2017 / 1:01 AM / in a month

Stocks end flat, U.S. Treasury yields fall after Powell report

NEW YORK (Reuters) - World stock markets were flat on Thursday as a report on President Donald Trump’s possible selection to lead the U.S. Federal Reserve pushed Wall Street to the plus side and sent U.S. Treasury yields lower.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, October 17, 2017. REUTERS/Staff/Remote

After the market slowly pared its gains throughout the latter portion of trading, a report from Politico that Trump was leaning toward nominating Federal Reserve Governor Jerome Powell to succeed Janet Yellen to head the U.S. central bank lifted both the Dow and S&P 500 into positive territory.

The Nasdaq remained in the red, however, weighed down by a 2.4 percent decline in Apple (AAPL.O) to $155.98 on signs of poor demand for its iPhone 8.

“Clearly at the end it had everything to do with the speculation about Jerome Powell,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

“He’s viewed to be sort of an extension of Janet Yellen by way of being a policy dove. At least that’s the interpretation of his experience in history, and therefore with the market loving more of the same with regard to uber accommodative monetary policy is more welcome than the alternative, which would be the market speculating on (Trump) selecting somebody more hawkish in nature.”

Benchmark 10-year U.S. Treasury notes US10YT=RR last rose 6/32 in price to yield 2.3178 percent, from 2.339 percent late on Wednesday.

The greenback also weakened after the report. The dollar index .DXY fell 0.24 percent, with the euro EUR= up 0.54 percent to $1.1851.

The Dow Jones Industrial Average .DJI rose 5.44 points, or 0.02 percent, to 23,163.04, the S&P 500 .SPX gained 0.84 points, or 0.03 percent, to 2,562.1 and the Nasdaq Composite .IXIC dropped 19.15 points, or 0.29 percent, to 6,605.07.

Traders were marking 30 years to the day since the 1987 Black Monday stock market crash, although many market participants considered another such crash unlikely.

European shares notched their largest drop in two months on concerns over political upheaval in Spain and after disappointing results from large companies such as Unilever, France’s Publicis and Germany’s Kion.

Spain’s central government said it would suspend Catalonia’s autonomy and impose direct rule after the region’s leader threatened to go ahead with a formal declaration of independence if Madrid refused to hold talks.

The pan-European FTSEurofirst 300 index .FTEU3 lost 0.60 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.02 percent.

Madrid's IBEX .IBEX ended down 0.7 percent, after dropping as much as 1 percent.

Data from China also put a damper on risk appetite, showing economic growth cooled slightly to 6.8 percent in the third quarter from a year earlier, compared with the second quarter’s 6.9 percent.

Other data showed China’s industrial output rose a stronger-than-expected 6.6 percent in September, while retail sales also outperformed.

But property sales fell for the first time in over two years. In addition, People’s Bank of China Governor Zhou Xiaochuan spoke of the risks of a “Minsky moment” in the economy, referring to a sudden collapse in asset prices sparked by debt or currency pressures.

U.S. crude CLcv1 settled down 1.4 percent at $51.29 per barrel and Brent LCOcv1 was last at $57.23, down 1.6 percent on the day, pressured by larger-than-expected product inventories in the United States and some profit-taking after a recent run-up in oil benchmarks.

Additional reporting by Caroline Valetkevitch; Editing by Dan Grebler

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