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Stocks rise with Treasury yields on pause, Powell boosts rate cut hopes


By Sinéad Carew and Lawrence White

NEW YORK/LONDON (Reuters) -A global equities gauge rose to record levels on Wednesday while the U.S. Treasury 10-year yield fell slightly as investors awaited U.S. inflation data and eyed comments by Federal Reserve Chair Jerome Powell for clues about interest rate cut prospects.

The U.S. dollar edged lower while the euro rose slightly and sterling rallied as comments from the Bank of England’s chief economist dampened expectations for an August rate cut.

This was after Powell told Congress on Tuesday – day one of a two-day appearance – that since the U.S. economy was no longer running too hot the central bank has to weigh risks, and that cutting rates would make sense when more progress is made on inflation. However, Powell did not signal a timing for cuts.

So with the absence of any big economic data releases on Wednesday, Matt Stucky, chief portfolio manager for equities at Northwestern (NASDAQ:NWE) Mutual Wealth Management, said investors were looking back to Powell’s comments on Tuesday and ahead to June’s Consumer Price Index report (CPI), due out on Thursday.

“The momentum from yesterday has carried through,” said Stucky. “Investors are cautiously optimistic that we’ll start cutting rates in September, and probably looking at tomorrow’s CPI print as a pretty crucial data point for taking that confidence level higher as you think about the next easing regime from the Federal Reserve.”

The closely-watched monthly U.S. inflation report is due on Thursday, where core consumer prices are expected to hold steady in June.

On Wall Street at 11:24 a.m. EDT (1524 GMT), the Dow Jones Industrial Average was up 57.44 points, or 0.14%, to 39,348.90, the S&P 500 gained 16.85 points, or 0.30%, to 5,593.83 and the Nasdaq Composite advanced 73.28 points, or 0.40%, to 18,502.61.

MSCI’s gauge of stocks across the globe rose 3.03 points, or 0.37%, to 820.81 while Europe’s STOXX 600 index was up 0.92%.

In Treasuries, the yield on benchmark U.S. 10-year notes fell 0.2 basis points to 4.298% from 4.3% late on Tuesday, while the 30-year bond yield declined 0.6 basis points to 4.489%.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 0.2 basis points to 4.6263% from 4.628% late on Tuesday.

In currencies, the dollar dipped against the euro with Powell’s testimony in focus.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.09% at 105.03, with the euro up 0.1% at $1.0823.

Against the Japanese yen, the dollar strengthened 0.24% to 161.7. Sterling firmed 0.46% to $1.2841.

In commodities, oil prices rose as U.S. data showed larger than expected draws on crude and the Organization of the Petroleum Exporting Countries kept its growth forecast for oil demand unchanged for this year and next.

U.S. crude gained 1.2% to $82.39 a barrel and Brent rose to $85.46 per barrel, up 0.93% on the day.

Gold prices rose on raised expectations for U.S. interest rate cuts, while investors awaited for Thursday’s inflation data with a view to bolstering those expectations.

Gold added 0.57% to $2,377.13 an ounce. U.S. gold futures gained 0.72% to $2,377.00 an ounce. [GOL/]

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