Stocks gain with bond yields, dollar up; economy, rates in focus

By Sinéad Carew and Amanda Cooper

NEW YORK/LONDON (Reuters) -A global equity index rose on Monday with help from Wall Street, and U.S. Treasury yields climbed to an almost seven-month high while data showed a deterioration in U.S. consumer confidence and investors prepared for fewer Federal Reserve rate cuts in 2025.

In U.S. equities, Nasdaq and the S&P 500 were boosted mostly by rallies in megacap technology stocks such as Nvidia Corp (NASDAQ:NVDA ) and Broadcom (NASDAQ:AVGO ) Inc.

Earlier, the Conference Board said its U.S. consumer confidence index weakened in December to 104.7 versus economist expectations for an increase to 113.3 and November's upwardly revised 112.8 on concerns about future business conditions.

While new orders for key U.S.-manufactured capital goods rose in November amid strong demand for machinery, orders of durable goods, ranging from toasters to aircraft, dropped 1.1% after increasing 0.8% in October, with declines mostly reflecting weakness in commercial aircraft orders.

Citing weak consumer confidence as a key negative for equities on Monday, Robert Phipps, a director at Per Stirling Capital Management, highlighted the 10-year Treasury yield 's jump to its highest level since late May.

"It's important for equity investors that the 4.6% level holds for 10-year Treasury yields and if we break above it there's a risk the market will go ahead and test 5%," he said, pointing to a slowing in Fed rate cuts as the reason.

"The market is adjusting to a less dovish Fed policy," said Phipps, noting U.S. indexes looked weaker under the hood besides the rallies in heavyweight stocks.

"It is a deceptively strong market," he said.

On Wall Street, the Dow Jones Industrial Average rose 66.69 points, or 0.16%, to 42,906.95, the S&P 500 rose 43.22 points, or 0.73%, to 5,974.07 and the Nasdaq Composite rose 192.29 points, or 0.98%, to 19,764.89.

MSCI's gauge of stocks across the globe rose 5.51 points, or 0.65%, to 849.74 while earlier, Europe's STOXX 600 index finished up 0.14%.

Ahead of Tuesday's shorter trading day and Wednesday's market close for Christmas, Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder said investors still had last Wednesday's steep sell-off on their minds after the Fed clearly signalled for fewer rate cuts next year.

"There's concern about the economy. There's concern about the Fed making a wrong move and there's the great unknown of what Trump is actually going to do," said Ghriskey, referring to U.S. President-elect Donald Trump's Jan. 20 inauguration.

In U.S. Treasuries, 10-year yields hit their highest level since late May as the Treasury Department this week sells short- and intermediate-dated debt.

The yield on benchmark U.S. 10-year notes rose 6.7 basis points to 4.591%, from 4.524% late on Friday, while the 30-year bond yield rose 6.3 basis points to 4.7791%.

A $69 billion two-year notes sale was met with healthy demand on Monday for the first auction of $183 billion in coupon-bearing supply this week.

The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, rose 3 basis points to 4.342%, from 4.312% late on Friday.

In currencies, the dollar rebounded while the euro fell as recent global central bank meetings set expectations for diverging rate cut paths in the year ahead.

The dollar index , measuring the greenback against a basket of major currencies, rose 0.27% to 108.08.

The euro was down 0.22% at $1.0406 and against the Japanese yen, the dollar strengthened 0.45% to 157.12.

Elsewhere, Sterling weakened 0.31% to $1.253 and Mexico's peso < MXN=> weakened 0.6% versus the dollar.

Oil prices settled down slightly in thin trade before the holiday with concerns about a supply surplus next year and a strengthened dollar. [O/R]

U.S. crude settled down 0.32%, or 22 cents at $69.24 a barrel and Brent fell to $72.63 per barrel, down 0.43%, or 31 cents on the day.



Gold prices edged lower in subdued holiday-season trading, weighed by a robust dollar and high U.S. Treasury yields.

Spot gold fell 0.39% to $2,610.66 an ounce. U.S. gold futures fell 0.67% to $2,611.10 an ounce.

Source: Investing.com