GLOBAL MARKETS-U.S. stocks rise as yields hit two-week low; copper falls

BY Reuters | TREASURY | 06/23/22 03:16 PM EDT

* Defensive stocks lead Wall Street higher amid recession fears

* Crude oil futures extend losses in volatile trade

* U.S. Treasury yields at 2-week low (New throughout, updates prices, market activity and comments, adds oil price settlement)

By Caroline Valetkevitch

NEW YORK, June 23 (Reuters) - Stocks on Wall Street rose on Thursday as U.S. Treasury yields fell to a two-week low, while copper was at 16-month lows as investors worried about a possible global economic slowdown.

Fed Chairman Jerome Powell testified before Congress for a second day, a day after saying the Fed is committed to cutting inflation at all costs, and acknowledged a recession was "certainly a possibility."

Investors have been weighing the risk of hefty interest rate rises tipping economies into recession.

"What we're seeing here is a (stock) market trying to absorb the Fed's tightening and basically trying to put in a low in a bear market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"We have yields that are coming down, and so that's helping stocks. The market has discounted a lot, and yesterday Powell basically acknowledged they're going to do everything to fight inflation... for now, the market has probably discounted somewhat of a mild recession."

Gauges of factory activity released Thursday in Japan, Britain, the euro zone and United States all softened in June, with U.S. producers reporting the first outright drop in new orders in two years.

Manufacturing growth is slowing worldwide partly because China's COVID-19 curbs and Russia's invasion of Ukraine have disrupted supply chains and added to inflation problems.

Nasdaq led the way higher on Wall Street, and technology and growth shares were outperforming.

The Dow Jones Industrial Average rose 9.72 points, or 0.03%, to 30,492.85, the S&P 500 gained 12.44 points, or 0.33%, to 3,772.33 and the Nasdaq Composite added 102.73 points, or 0.93%, to 11,155.81.

The pan-European STOXX 600 index lost 0.82% and MSCI's gauge of stocks across the globe shed 0.01%.

In the bond market, yields have dropped from their highest in more than a decade, reached before last week's Fed meeting, when the U.S. central bank hiked rates by 75 basis points, the biggest increase since 1994, and signalled a possible similar move in July.

Benchmark 10-year notes last rose 23/32 in price to yield 3.0702%, from 3.156% late on Wednesday.

Copper prices slumped as rising interest rates and weak economic data fed worries about demand.

Copper on the London Metal Exchange (LME) was down more than 3% and hit its lowest since February 2021.

In the foreign exchange market, the dollar index rose 0.201%, with the euro down 0.44% to $1.0519.

Oil prices ended lower as investors weighed the risk of a recession. Brent crude futures fell $1.69 to settle at $110.05 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped $1.92 to settle at $104.27.

(Reporting by Caroline Valetkevitch; Additional reporting by Huw Jones in London and by Sujata Rao, Editing by Clarence Fernandez, David Evans, Nick Zieminski and David Gregorio)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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