US stocks end higher, Treasury yields rise on easing credit, trade worries
NEW YORK :Wall Street stocks advanced and U.S. Treasury yields rebounded on Friday as investors assessed the health of regional banks and President Donald Trump said his face-to-face trade talks with Chinese President Xi Jinping were still on.
All three major U.S. stock indexes closed in positive territory after struggling for direction in early trading, and all three notched weekly gains.
Benchmark Treasury yields and the dollar turned higher, while gold pulled back after a record run sent the precious metal to all-time highs.
Worries over potential systemic credit problems in the banking sector abated the day after Zions disclosed it would take a $50 million loan loss in the third quarter and Western Alliance initiated a lawsuit alleging fraud by an investment firm.
The KBW Regional Banking index advanced 1.7 per cent in a partial recovery from Thursday's 5.0 per cent plunge.
"It took a night to sleep on it, but some calm has come in over the probably overblown worries in the regional bank area," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "The truth is the financial sector is likely still on firm footing; just a couple companies had some bad news, but it's not systemic."
Trade tensions between Washington and Beijing were calmed by Trump's assurances that his proposed 100 per cent tariff on Chinese imports would not be sustainable. He confirmed he would meet with Chinese President Xi Jinping in two weeks in South Korea.
"We've seen this movie before," Detrick added. "A week ago, President Trump was talking 100 per cent tariffs and the market had its worst selloff in months and now today he's clearly putting some water on that fire, saying he and President Xi have a good relationship."
The first official week of the third-quarter earnings season is in the books, with 58 per cent of companies in the S&P 500 having reported. Of those, 86 per cent have delivered stronger-than-expected results. Analysts now expect third-quarter S&P 500 earnings growth of 9.3 per cent year-on-year, up from 8.8 per cent as of October 1, according to LSEG data.
The Dow Jones Industrial Average rose 238.37 points, or 0.52 per cent, to 46,190.61, the S&P 500 rose 34.94 points, or 0.53 per cent, to 6,664.01 and the Nasdaq Composite rose 117.44 points, or 0.52 per cent, to 22,679.98.
European stocks closed lower as signs of credit stress in U.S. regional banks dampened investor risk appetite, driving them to safe-haven assets.
MSCI's gauge of stocks across the globe fell 0.21 points, or 0.02 per cent, to 984.18.
The pan-European STOXX 600 index fell 0.95 per cent, while Europe's broad FTSEurofirst 300 index fell 20.72 points, or 0.91 per cent.
Emerging market stocks fell 16.86 points, or 1.22 per cent, to 1,362.10. MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 1.24 per cent, to 706.04, while Japan's Nikkei fell 695.59 points, or 1.44 per cent, to 47,582.15.
U.S. Treasury yields rose and the dollar strengthened as worries stemming from the escalating trade war and regional banks' credit quality ebbed. The greenback, however, remained on track for a weekly loss.
The yield on benchmark U.S. 10-year notes rose 2.9 basis points to 4.005 per cent, from 3.976 per cent late on Thursday.
The 30-year bond yield rose 1.7 basis points to 4.6005 per cent from 4.583 per cent late on Thursday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 3.3 basis points to 3.459 per cent, from 3.426 per cent late on Thursday.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.16 per cent to 98.42, with the euro down 0.15 per cent at $1.1669.
Against the Japanese yen, the dollar strengthened 0.04 per cent to 150.48.
Oil prices inched higher but lost ground on the week amid the fog of global supply uncertainty.
U.S. crude rose 0.14 per cent to settle at $57.54 per barrel, while Brent settled at $61.29 per barrel, up 0.38 per cent on the day.
Gold prices pulled back from record highs, pressured by a firmer dollar.
Spot gold fell 2.19 per cent to $4,230.60 an ounce. U.S. gold futures fell 1.3 per cent to $4,224.60 an ounce.
