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U.S. Stocks Climb Amid Hopes for Rate Cut

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07/19/2019 | 09:53am EDT

By Nathan Allen

--S&P 500 rise 0.3% following mixed trading in Asia, Europe

--Brent crude gains amid U.S.-Iran tensions over downed drone

--Microsoft climbs after posting record revenue

U.S. stocks opened higher Friday after a Federal Reserve official made comments that seemed to strengthen the case for an interest-rate cut.

The Dow Jones Industrial Average rose 90 points, or 0.3%, to 27313 shortly after the opening bell. The S&P 500 added 0.2% and the Nasdaq Composite climbed 0.4%.

U.S. stocks closed higher Thursday after New York Fed President John Williams said central banks must take swift action when faced with adverse economic conditions, which some investors interpreted as signaling a 0.5% rate cut in July. However, the bank later said Mr. Williams didn't intend to signal any specific policy changes.

The yield on the 10-year Treasury note rose to 2.0515% on Friday, while the 2-year note yield, sensitive to shifting expectations for Fed policy, ticked up to 1.810%, according to data from FactSet. The short-term Treasury yields had fallen sharply following those remarks.

"Given that a 50-basis-point cut would trigger a further rally in global equities, any remark of dovish nature translates immediately into higher asset prices," said Ipek Ozkardeskaya, a senior analyst at London Capital Group.

The WSJ Dollar Index climbed almost 0.3% to 89.97.

Meanwhile, shares in Microsoft were up 2.4% after the world's most valuable public company said late Thursday that its cloud-computing business drove revenue to a record in the most-recent quarter. Its profit also beat expectations.

Friday is poised to be another big day for investors in financial stocks, with a number of firms including American Express and State Street reporting second-quarter results. State Street rose 2.2% after its earnings were announced. American Express shares edged down 0.9% after it released its quarterly results.

Investors will also be watching for University of Michigan's July consumer confidence data. Economists surveyed by The Wall Street Journal forecast the consumer sentiment index logged in at 99.0 in the beginning of July, up slightly from 98.2 at the end of June. Such a rise could reduce the likelihood of a large rate cut by the Fed at the end of the month and provide some support for the U.S. dollar, Rabobank said.

Meanwhile, global oil benchmark Brent crude rose 0.8%, rebounding from the month's lows and marking a second day of volatility in the prices. Iran denied that the U.S. Navy downed one of its drones in the Strait of Hormuz, following several close encounters between American warships and the Iranian military on Thursday in the vital oil shipping route that have further raised tensions between the nations.

In Europe, the basic-resources, industrial-goods and food-and-beverage sectors were among gainers on the pan-continental Stoxx Europe 600 index, which rose 0.2% following a two-day losing streak.

Brewer Anheuser-Busch InBev was among Europe's biggest gainers, after the Budweiser maker agreed to sell its Australian subsidiary to Japan's Asahi Group Holdings in an $11.3 billion deal in an effort to pare its debt load.

In Asia, most benchmark gauges traded higher. Hong Kong's Hang Seng Index rose more than 1%, buoyed by consumer-goods companies.Japan's Nikkei 225 index climbed 2%.

-- Lauren Almeida contributed to this article

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 1.20% 25886.01 Delayed Quote.10.97%
HANG SENG 0.87% 25749.62 Real-time Quote.-0.37%
NASDAQ 100 1.59% 7604.108768 Delayed Quote.20.13%
NASDAQ COMP. 1.67% 7895.993811 Delayed Quote.19.00%
NIKKEI 225 0.06% 20418.81 Real-time Quote.2.02%
S&P 500 1.44% 2888.68 Delayed Quote.13.59%
US DOLLAR INDEX 0.00% 98.142 End-of-day quote.1.51%
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