U.S. Stocks Rise for 3rd Month, Dollar Jumps Most Since 2014
Source: Bloomberg
U.S. stocks rose for a third month, the longest rally since June 2014, while the dollar ended May with its biggest advance in almost two years as speculation mounted that the American economy can withstand higher interest rates this summer.
The S&P 500 Index slipped Tuesday, nearly wiping out a 0.5 percent slide in the last hour of trading, but still advanced 1.5 percent in May. Data showing consumer spending climbed the most in seven years bolstered the case for higher rates, as the dollar capped a 3.7 percent rise this month. Yields on two-year notes, the coupon securities most sensitive to Fed expectations, jumped 10 basis points in May. Gold halted a nine-day slide, while crude trimmed a fifth monthly advance, its longest run in five years.
The Fed’s rate outlook is occupying investors as futures show odds of a hike in July at more than 50 percent while gains in commodity prices from crude to crops bolster prospects for inflation. A report today showing U.S. consumer spending climbed in April by the most in almost seven years added to optimism that growth in the world’s largest economy is robust enough to withstand the second rate hike in eight years.
“Markets are getting used to the notion that it would be appropriate that there’s a Fed hike in June,” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co., which oversees $8.5 billion in Bryn Mawr, Pennsylvania. “You’re seeing a drift downwards on light volume. Economic data is good, oil is trading in the tight range -- nothing dramatic there.”
Read more: http://www.bloomberg.com/news/articles/2016-05-30/dollar-s-ascent-firms-on-fed-outlook-while-gold-tries-to-rebound
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