U.S. stocks end mixed with Nasdaq at record close, dollar gains



(Updates to U.S. markets close)

* Reuters Live Markets blog:

* European stocks falter

* PMIs show European growth

* Dollar steadies, crypto recovers

By Chris Prentice and Elizabeth Howcroft

WASHINGTON/LONDON, June 23 (Reuters) - Wall Street shares were mixed on Wednesday, with the Nasdaq closing at a record high, while other major U.S. indexes ended lower alongside European stocks as traders eyed the latest statements from Federal Reserve officials.

The market has whipsawed over the last week, feeling the aftereffects of the Fed's surprise projection last week for rate increases as soon as 2023, which knocked stocks, boosted the dollar and led to the flattening of the U.S. bond yield curve.

The dollar =USD ended higher, reversing earlier losses on Wednesday as two Fed officials said that a period of high inflation in the United States could last longer than anticipated, a day after Fed Chair Jerome Powell played down rising price pressures.

Powell on Tuesday reassured markets by saying the central bank will watch a broad set of job market data to assess the economic recovery from COVID-19, rather than rush to raise rates on the basis of fear of inflation.

Ten-year Treasury yields inched higher but remained below 1.5% in muted trading.

Strong manufacturing data and a rally in Tesla Inc TSLA.O lifted the Nasdaq .IXIC , which gained 0.13 percent. The Dow Jones Industrial Average .DJI fell 0.21 percent and the S&P 500 .SPX lost 0.11 percent.

"The market is caught between not knowing what to believe about the coming few quarters, whether a slowdown will emerge," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "We’re going back and forth depending on thoughts about interest rates and whether they are going to need to go up faster than expected or not."

Flash U.S. manufacturing PMI climbed to a record high in June, supporting Wall Street shares in early trade. But manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices for both businesses and consumers.

Sales of new U.S. single-family homes fell to a one-year low in May, likely hindered by expensive raw materials such as lumber, which are boosting the prices of newly built homes.

"The biggest debate in the market is if inflation is transitory or permanent," said JJ Kinahan, chief market strategist with TD Ameritrade. "I would expect this pattern of trading without great conviction to continue with quick adjustments until earnings start."

The 10-year U.S. Treasury yield stood at 1.4869% US10YT=RR .

The MSCI world equity index .MIWD00000PUS rose 0.1%, continuing to climb from the one-month low it hit in the aftermath of the Fed's meeting.

The STOXX 600 was 0.73% lower on the day .STOXX and the euro EUR= retreated 0.1%.

Early PMI data showed that euro zone business growth accelerated at its fastest pace in 15 years in June as the easing of more lockdown measures and the unleashing of pent-up demand drove a boom in the bloc's dominant services industry.

Germany's private-sector growth was also lifted to its highest level in more than a decade in June, the PMI survey showed. In France, business activity edged higher, but not as much as expected.

In Britain, growth in the private sector cooled slightly from the all-time high hit in May, but inflation pressures faced by firms hit record levels. The Bank of England meets on Thursday.

Berenberg economists Holger Schmieding and Kallum Pickering wrote in a note to clients that the euro zone economy is likely to recover to its pre-pandemic level of GDP in Q4 2021, while for Britain it will be Q1 2022.

UBP's Kazmi said that he is positioned for higher yields in Europe, as it overtakes the United States in terms of vaccinations, lockdown easing and economic recovery from COVID-19.

"It will be interesting to see if the German Bund can follow the U.S. rate move with yields moving higher in Europe – it is something that we think could happen," he said.

"The fact that the Fed has moved more hawkishly will allow the ECB to be more comfortable perhaps in moving more hawkish, or less dovish, over time."

Germany's benchmark Bund yield traded at -0.176% DE10YT=RR .

Oil prices jumped to their highest in more than two years after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

"We're all starting to drive more," Tuz said.

Brent crude futures LCOc1 were up 0.71 percent at $75.34 a barrel and U.S. crude CLc1 gained 0.62 percent to trade at $73.3 per barrel.

Rising oil prices supported the Colombian COP= and Mexican MXN= pesos as the dollar extended losses following reassurances that the Fed would not rush into policy tightening.

The Chilean peso led gains among its Latin American counterparts after minutes from the country's latest central bank meeting showed policymakers considered raising the benchmark interest rate.

Spot gold prices XAU= fell 0.07%, reversing earlier gains. Gold futures GCv1 settled up 0.3% at $1,783.40, buoyed by Powell's reassurances.

Bitcoin rose around 2.1%, giving back some of the day's steeper gains BTC=BTSP . The cryptocurrency dropped to as low as $28,600 on Tuesday - its lowest since January. Ether gained 3.3% ETH=BTSP .



Emerging markets Link
Global asset performance Link



Reporting by Chris Prentice and Elizabeth Howcroft; Editing by
Emelia Sithole-Matarise, Angus MacSwan, Jonathan Oatis and Jane
Merriman

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.