S&P 500 closes at record as yields rise, dollar retreats

By Chris Prentice and Amanda Cooper

NEW YORK/LONDON (Reuters) -Global equities climbed to a more than two-year peak and the S&P 500 closed at a record high on Wednesday, as strong earnings offset jitters related to U.S. regional banks and China’s markets.

Bonds yields rose as comments from Federal Reserve officials reaffirmed expectations that the central bank may not cut rates soon.

The U.S. dollar retreated and oil prices rose.

The MSCI world equity index, which tracks shares in 49 countries, gained 0.59% after hitting its highest since mid-January 2022.

On Wall Street, the Dow Jones Industrial Average rose 175.88 points to 38,697.24, the S&P 500 gained 39.93 points to 4,994.16 and the Nasdaq Composite added 140.80 points to 15,749.80.

The S&P 500 .SPX closed at its highest level ever, lifted by optimism about earnings following quarterly reports from Chipotle Mexican Grill and Ford Motor.

“We are at the midpoint of the 4Q earnings reporting season, and we would say that there has been more good news than bad,” Arthur Hogan, chief market strategist with B. Riley Wealth, said in a market note.

The U.S. regional banking sector remained a concern as Moody’s downgraded New York Community Bancorp to junk citing pressure on its funding and liquidity.

The KBW regional banking index pared losses but still ended lower and is down more than 5% so far this month.

Chinese regulators continued efforts to steady markets, placing further curbs on short selling and state investors said they were expanding their stock buying plans. President Xi Jinping will discuss the stock market with financial regulators, Bloomberg News reported.

The head of China’s securities regulator was replaced on Wednesday, according to Xinhua news agency, as policymakers struggle to stabilize the country’s main stock indexes.

“We’re looking at more than $5 trillion being wiped out from the equity markets. Clearly, they want to stem those losses, they want to introduce and change and they’re trying to be a lot more forceful about it,” said Aneeka Gupta, equity strategist at wisdomtree.

In Europe, equities ended lower as weakness in banking shares weighed, while losses in energy heavyweights Equinor and TotalEnergies following corporate updates only compounded the fall.

The pan-European STOXX 600 index closed 0.3% lower, with shares in Spain lagging regional peers and retreating 1.2%.


Federal Reserve regional presidents Loretta Mester and Neel Kashkari welcomed the progress on inflation but signaled there was more work to do before policy could be eased.

“The events of the last few days (have) seen markets try and absorb the fact that rate cuts might have to wait until much later in the year, and what any delay means for asset prices and valuations,” CMC Markets chief market strategist Michael Hewson said.

Fed Chair Jerome Powell on Sunday said the central bank could be “prudent” on the timing of rate cuts.

The probability of a U.S. rate cut as early as May now stands at just 39%, when it was considered a done deal only a week ago.

The dollar index, which tracks the currency against a basket of major currencies, was down at 104.04.

The yield on benchmark 10-year Treasury notes rose to 4.1172% from 4.092% previously. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, climbed to 4.4329% from 4.408%.

Oil prices gained after data showed U.S. crude inventories grew less than expected and as tensions rose in the Middle East. Brent crude futures settled up 0.79% at $79.21 a barrel and U.S. crude climbed 55 cents, or 0.75% to $73.86.

Spot gold prices were down 0.08% as U.S. gold futures settled mostly unchanged at $2051.70.

(Additional reporting by Harry Robertson in London and Wayne Cole in Sydney;Editing by Emelia Sithole-Matarise, Chizu Nomiyama, Will Dunham and Ros Russell)