The Dow Jones gained 0.4% and the Nasdaq rose 0.3% (Bloomberg)
The Dow Jones gained 0.4% and the Nasdaq rose 0.3% (Bloomberg)

US stocks regain footing after Rubio buyback tweet

  • The S&P 500 Index rose 0.3% to a 10-week high
  •  The dollar moved higher and Treasuries edged lower after data showed US inflation remained contained

US equities stabilized on Wednesday after Senator Marco Rubio’s proposal to tax buybacks on equal footing with dividends took some of the steam out of this week’s rally. The dollar moved higher and Treasuries edged lower after data showed US inflation remained contained.

The Florida Republican’s tweet about his buyback proposal slowed an advance in the S&P 500 Index, which had been driven higher by optimism that Donald Trump is closer to accepting a border deal, averting another government shutdown. Further buoying shares this week, the US president had said he’s open to extending a 1 March deadline to raise tariffs on Chinese products if the two sides are near an agreement.

“Any government interference within the capital markets, and changes that they want to make, investors are always a little bit cautious about -- and clearly this is a change which would cause additional costs for investors," Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said of Rubio’s proposal. That a Republican was backing this measure may have further alarmed some investors, Zaccarelli added.

Oil continued its rebound from a two-week low, after Saudi Arabia pledged to deepen output cuts, and held most of those gains even after the EIA reported bigger US crude stockpiles than anticipated. Energy shares led gainers on the S&P 500; utilities lagged.

The US inflation numbers bolstered the Federal Reserve’s decision to be patient on raising interest rates. And with major central banks seemingly on pause or turning dovish, investor attention now appears firmly focused on the outlook for global trade and the chances of progress at the next round of talks between the US and China in Beijing. Protectionist measures have been heaping pain on many large economies, some of which are also grappling with a slowdown in growth.

Shares in Shanghai surged on trade hopes, and the Stoxx Europe 600 Index rose for a third day. The euro weakened after a report showed industrial production across the 19-nation region is falling at the fastest pace since the financial crisis.

These are the main moves in markets:

Stocks

The S&P 500 Index rose 0.3% to a 10-week high as of 2:11pm New York time. The Dow Jones Industrial Average gained 0.4% and the Nasdaq 100 rose 0.3%. The Stoxx Europe 600 Index rose 0.6% to its highest in a week. The UK’s FTSE 100 Index rose 0.8% to a four-month high. The MSCI Emerging Market Index fell less than 0.05%.

Currencies

The Bloomberg Dollar Spot Index rose 0.4% to a six-week high. The euro decreased 0.4% to $1.1278. The British pound fell 0.3% to $1.2859. The Japanese yen dipped 0.4% to 110.94 per dollar.

Bonds

The yield on 10-year Treasuries rose one basis point to 2.70%. Germany’s 10-year yield fell one basis point to 0.12%. Britain’s 10-year yield fell less than one basis point to 1.182%.

Commodities

The Bloomberg Commodity Index gained 0.1%. West Texas Intermediate crude climbed 1.7% to $54.02 a barrel. Gold fell 0.1% to $1,310.04 an ounce.

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