Published: Sat, August 31, 2019
Markets | By Otis Pena

USA stocks edge lower as rocky month nears end

USA stocks edge lower as rocky month nears end

Treasury yields extended their rise following a $32 billion auction of seven-year debt, in which the overall bidding was its weakest since this security debuted more than a decade ago.

USA and European shares advanced on Thursday and Treasury yields ticked higher as China struck a hopeful tone on trade relations with the United States and as Italy appeared close to forming a new government and resolving its political crisis.

"It sounds to me like more of a continued slow-walking", said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta, Georgia.

The S&P 500 Index rose 0.7%.

On Wall Street, the Dow Jones Industrial Average rose 328.53 points, or 1.26%, to 26,364.63, the S&P 500 gained 37.07 points, or 1.28%, to 2,925.01 and the Nasdaq Composite added 116.32 points, or 1.48%, to 7,973.21.

The Russell 2000 index of smaller company stocks dropped 1.88 points, or 0.1%, to 1,494.84.

Britain's 10-year yield fell one basis point to 0.436%. Some investors have hedged against a possible USA rate rise by reducing holdings of long-term bonds and grabbing other fixed-income products such as private debt and structured credit.

"We found the limits of how far both the USA and the Chinese side can push the trade issue until it actually starts to manifest itself in markets", Samana said. The yield on 30-year bonds rose to 1.9727%, rallying from record lows of 1.905% touched on Wednesday.

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Investors had wondered about the prospect of USA bond yields below zero as negative yields have become a mainstay in Europe and Japan.

"The markets are functioning well, and while we estimate the dollar is about 10% overvalued relative to structural and fundamental macroeconomic factors, this is largely in line with past episodes when the USA economy has outperformed its peers", Gene Frieda and Tiffany Wilding, analysts at the PIMCO, wrote in a note last month.

In late trading, US benchmark 10-year Treasury note yields rose to 1.5063%, up 3.8 basis points from Wednesday.

Investors were encouraged by a Chinese government statement Thursday that its penalties on USA products are adequate. Trump said Thursday that the US and China are scheduled to have a conversation about trade today. -Chinese talks might produce progress toward ending a costly tariff war over trade and technology. The contract rose 93 cents on Thursday to close at $56.71.

US crude settled 1.67% higher at $56.71 a barrel, while Brent settled at $61.08 a barrel, up 0.98%. The euro retreated to $1.1041 from $1.1057.

The dollar fell to 106.25 Japanese yen from 106.62 yen on Thursday.

USA markets will be closed Monday for Labor Day.

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