Stocks Bounce Back With S&P Futures; Dollar Falls

U.S. stocks advanced as Treasury yields erased most of their climb, with financial markets looking to stabilize after the worst week in two years for American equities.

The S&P 500 Index set new session highs as the 10-year yield fell back from the four-year high hit earlier Monday. Stocks and bonds have been in a tug-of-war since a blowout jobs report sent Treasury yields spiking, raising the specter of higher interest rates this year. The subsequent sell-off that wiped $2 trillion from U.S. stocks sparked demand for the haven of fixed income, driving yields back down.

The CB OE Volatility Index edged lower, but traders were still on edge following the tumultuous move in equities last week. Investors are awaiting U.S. consumer-price data due Wednesday with some trepidation, given that pressure on equities has been emanating from the Treasury market and the outlook for inflation.

“The base case here is that the fundamentals are just as good as they were in January, before the volatility started,” said Michael Purves, the chief global strategist at Weeden & Co. “But the surface is going to be choppier.”

European and Asian equities rose Monday, while the dollar’s slide supported commodities, with metals higher and crude oil rallying after a six-day selloff.

The South Korean won outperformed major currencies after Vice President Mike Pence told the Washington Post the U.S. is ready to engage in talks about North Korea’s nuclear program, signaling a shift in policy. South Africa’s rand strengthened on speculation President Jacob Zuma is poised to leave office.

These are the main moves in markets:

– Stocks: The S&P 500 Index rose 1.5 percent as of 12:24 p.m. in New York. The Stoxx Europe 600 Index climbed 1.2 percent. The MSCI All-Country World Index added 1.2 percent, the most since April. The U.K.’s FTSE 100 Index rose 1.2 percent.

– Currencies: The Bloomberg Dollar Spot Index dipped 0.1 percent. The euro rose 0.1 percent to $1.2269. The British pound was little changed at $1.3824. South Africa’s rand climbed 0.8 percent to 11.9026 per dollar.

– Bonds: The yield on 10-year Treasuries rose one basis point to 2.86 percent. Germany’s 10-year yield rose one basis point to 0.75 percent. Britain’s 10-year yield rose three basis points to 1.6 percent.

– Commodities: West Texas Intermediate crude surged 1.3 percent to $59.96 a barrel, the first advance in more than a week. Gold rose 0.7 percent to $1,325.59 an ounce, the largest advance in two weeks. Copper futures climbed 1.6 percent for the first advance in five days.