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People are reflected on a glass door as monitors display stock prices inside the trading gallery of the RHB Investment Bank Bhd. headquarters in Kuala Lumpur, Malaysia, on Monday, May 14, 2018. Malaysia's markets showed few signs of investor panic as trading reopened after Mahathir Mohamad swept to power in a surprise election outcome.

(bloomberg)

(Bloomberg) -- U.S. stocks advanced and 10-year Treasury yields pushed toward 3.1 percent as retailer results and solid economic data boosted confidence in the American economy. The euro fell amid political uncertainty in Italy.

The S&P 500 Index rose above its average price for the past 100 days and the Russell 2000 Index hit an all-time high. The 10-year note yield advanced anew as factory production and housing starts showed strength in the economy. Europe’s common currency fell as Italy moved closer to a populist government and the German chancellor cautioned that the region’s central bank will eventually ease stimulus.

Emerging-market equities rebounded after Tuesday’s plunge, but developing currencies turned lower. The Turkish lira reversed a drop after the central bank said it was monitoring markets and would take necessary steps. In Asia stocks nudged lower, with shares in Japan and Hong Kong declining while Australia’s main gauge eked out a gain and Korean stocks were little changed. The Malaysian ringgit fell for a sixth day.

Investors pushed American stocks higher on speculation that the world’s largest economy will continue to pick up steam after a lackluster first-quarter. Macy’s Inc. results bolstered the sense that consumers remain on strong footing, overcoming fresh uncertainty about the U.S.-North Korea summit continued to weigh on investor sentiment at the same time the Trump administration sends mixed signals on the state of play on negotiations with China over trade.

The question has now turned to whether higher Treasury yields, which act as a benchmark for global borrowing costs, indicate that the Federal Reserve will be forced accelerate monetary tightening.

Terminal users can read more in our markets live blog.

These are some key events to watch this week:

  • Chinese Vice Premier Liu He is expected in Washington for more trade talks.
  • U.S. industrial production numbers are due this week.

These are the main moves in markets:

Stocks

  • The S&P 500 Index rose 0.4 percent at 4 p.m. in New York. It fell Tuesday for the first time in five days.
  • The Russell 2000 added 1 percent to reclaim its record. The index is higher by more than 5 percent in 2018.
  • Macy’s jumped 11 percent and consumer-products makers paced gains in the equity benchmark.
  • The Stoxx Europe 600 Index advanced 0.2 percent to the highest in almost 15 weeks on the largest gain in a week.
  • The MSCI Emerging Market Index gained 0.5 percent.
  • The MSCI Asia Pacific Index fell 0.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index fell less than 0.1 percent, after reaching the highest in 20 weeks.
  • The euro fell 0.3 percent to $1.1807.
  • The Japanese yen increased 0.2 percent to 110.16 per dollar.
  • The Turkish lira climbed 0.5 percent to 4.4247 per dollar.

Bonds

  • The yield on 10-year Treasuries rose one basis point to 3.096 percent.
  • Germany’s 10-year yield dipped five basis points to 0.60 percent, the largest decrease in almost two weeks.
  • Britain’s 10-year yield declined three basis points to 1.491 percent.
  • Italy’s 10-year yield climbed 13 basis points to 2.08 percent, the highest in three months on the largest increase in almost 11 months.

Commodities

  • West Texas Intermediate crude declined 0.6 percent to $70.89 a barrel.
  • Gold dipped 0.3 percent to $1,287.24 an ounce, the weakest in 20 weeks.
  • Brent crude declined 0.7 percent to $77.85 a barrel, the biggest drop in more than a week.

--With assistance from Ruth Carson , Andreea Papuc and Samuel Potter .

To contact the reporter on this story: Jeremy Herron in New York at jherron8@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Robert Brand

©2018 Bloomberg L.P.

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