GLOBAL MARKETS-Stocks gain, U.S. yields fall after retail sales data

BY Reuters | ECONOMIC | 06/18/24 11:20 AM EDT

(Updated at 10:51 a.m. ET/1451 GMT)

By Chuck Mikolajczak

NEW YORK, June 18 (Reuters) -

A gauge of global stocks advanced for a second straight session on Tuesday and U.S. Treasury yields fell after a softer-than-expected report on consumer spending, while investors digested comments from Federal Reserve officials on interest rates.

The U.S. Commerce Department said

retail sales rose

0.1% last month after a downwardly revised 0.2% drop in April and below expectations of economists polled by Reuters for a gain of 0.3%, indicating economic activity was slowing as higher interest rates affect consumer spending patterns.

"Any increase is bound to be a dead-cat bounce, April's number was revised lower and it was a weak advance from that lower base," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

"Consumers are feeling the pinch of high prices and high financing costs."

Market expectations the U.S. Federal Reserve could cut rates at its September meeting crept higher, pricing in a 67% chance for a cut of at least 25 basis points, up from 61.5% in the prior session.

Other data showed U.S. business inventories rebounded in April, increasing by 0.3% after slipping 0.1% in March.

The Dow Jones Industrial Average fell 17.74 points, or 0.05%, to 38,759.63, the S&P 500 gained 3.45 points, or 0.06%, to 5,476.60 and the Nasdaq Composite lost 17.30 points, or 0.10%, to 17,839.39.

U.S. markets are closed on Wednesday for the Juneteenth holiday.

MSCI's gauge of stocks across the globe rose 2.57 points, or 0.32%, to 802.94 after climbing to within a point of a new record.

New York Federal Reserve President

John Williams said

interest rates will come down gradually over time, but declined to say when the U.S. central bank can kick off its monetary policy easing, while Richmond Fed President

Thomas Barkin said

he needs to parse several more months of data before he can consider supporting a cut.

Multiple Fed officials are also on tap to speak on Tuesday, including Governor Adriana Kugler.

European shares also climbed, as the focus shifts to economic data and comments from central bank officials in the wake of the sharp drop last week after French President Emmanuel Macron called a snap election.

U.S. Treasury yields

moved lower

following the retail sales data. Later in the session, Treasury will auction $13 billion in 20-year bonds.

The yield on benchmark U.S. 10-year notes fell 2.7 basis points to 4.252%.

The dollar pared gains on the heels of the data and was only slighter higher on the session, as the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, gained 0.04% at 105.31. The euro was last up 0.03% at $1.0737.

Against the Japanese yen, the dollar strengthened 0.16% at 157.98 and sterling weakened 0.09% at $1.2692.

Earlier in the day, the Reserve Bank of Australia kept rates at a 12-year high of 4.35% on Tuesday, as expected, but warned there were still reasons to guard against inflation risks.

The Australian dollar strengthened 0.47% versus the greenback at $0.6643.

Central banks in Norway, Britain and Switzerland are also scheduled to meet this week, where only the Swiss National Bank is expected to announce a rate cut.

U.S. crude gained 1.29% to $81.37 a barrel and Brent rose to $85.04 per barrel, up 0.94% on the day after the comments from Williams and expectations for a drawdown in U.S. inventories.

(Reporting by Chuck Mikolajczak; Editing by Sharon Singleton)

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.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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