Stocks get lift from oil prices, Federal Reserve bets boost dollar
NEW YORK (Reuters) – Rising oil prices helped lift equity markets worldwide on Tuesday, while the US dollar jumped ahead of a meeting of Federal Reserve policy makers, who are expected to approve the first of at least three US rate hikes this year.
US technology stocks lagged broader markets, continuing a sell-off sparked by reports of large-scale misuse of Facebook user data. Shares of Facebook Inc. dipped almost 5% in morning trading, continuing a slide that took nearly 7% off its share price on Monday.
While stocks on Wall Street climbed, Facebook’s drop kept the gains in check.
The Dow Jones Industrial Average rose 165.58 points, or 0.67%, to 24,776.49, the S&P 500 rose 5.78 points, or 0.21%, to 2,718.7, and the Nasdaq Composite added 13.67 points, or 0.19%, to 7,357.91.
There were other tech-related problems. An accident involving an Uber test car on Monday that resulted in the first fatality involving a fully autonomous vehicle weighed on Silicon Valley sentiment.
Shares of European chip makers also faced pressure, while Germany’s SAP declined 0.5%, hit by the effect from US business-software peer Oracle, whose quarterly revenue missed analysts’ estimates.
The US dollar climbed to a one-week high against the Japanese yen as traders limbered up for the start of the two-day Fed meeting.
With a quarter-point hike – its sixth since the Fed began raising interest rates in late 2015 – baked into market prices, major currencies were largely moving in ranges.
Markets expect at least two more US rate hikes after Wednesday for the rest of the year, although analysts acknowledged that the central bank’s “dot plot” could potentially point to as many as four.
The Fed bets kept long-term US bond yields nudging higher, with short-dated yields also up.
Among the major commodities, oil prices jumped in line with the dollar as investors remained wary of growing crude supply, although tensions between Saudi Arabia and Iran provided some support.
US crude rose 2.43% to $63.57 per barrel, and Brent was last at $67.55, up 2.27%.
The potential for a trade war cast a shadow over export currencies after US President Donald Trump imposed steep tariffs on steel and aluminum. The government is expected to unveil up to $60 billion in new tariffs on Chinese imports by Friday.
US businesses were alarmed, with several large US retail companies, including WalMart Inc. and Target Corp., on Monday urging Trump not to impose massive tariffs on goods imported from China.
The dollar index, tracking the greenback against a basket of major currencies, rose 0.48%, with the euro down 0.41% to $1.2283.
The Japanese yen 0.30% to 106.41 per dollar, while sterling was at $1.4012, down 0.08% on the day.