US stocks rise on Federal Reserve decision

  • 07/07/2016

US stocks have risen as the Federal Reserve was seen refraining from raising US interest rates soon, even as economic data showed the world's largest economy regained speed in the second quarter.

The minutes for the June meeting of the US central bank, which took place before Britons voted to leave the European Union, showed widespread unease over the vote, as well as a severe slowdown in hiring by US employers.

Fed policymakers said rate hikes should stay on hold until they have a handle on the consequences of Brexit.

Since the vote, stocks have been volatile on Wall Street, while investors have driven up safe-haven assets such as gold and yields on long-term US debt have fallen to record lows.

"The money that you're seeing deployed in the US in my view is a repercussion of people looking to buy the oasis of growth and safe havens in the world, and that is the US," said Nate Thooft, US-based co-head of global asset allocation at Manulife Asset Management in Boston.

The Dow Jones industrial average rose 78 points, or 0.44 percent, to 17,918.62, the S&P 500 gained 11.18 points, or 0.54 percent, to 2,099.73 and the Nasdaq Composite added 36.26 points, or 0.75 percent, to 4,859.16.

Most of the major S&P 500 indexes were higher, led by a 1.2 percent rise in healthcare.

Facebook rose 2.4 percent and provided the biggest boost to the Nasdaq and the S&P 500.

US services industry activity hit a seven-month high in June as new orders surged and companies hired more workers, suggesting the economy regained speed in the second quarter.

European stocks fell, led lower by major banks and other financial stocks as worries persist about the impact of the Brexit.

The pan-European STOXX 600 and the similar FTSEurofirst 300 index fell 1.7 percent and 1.6 percent respectively, both striking a third day of losses in a row.

The STOXX Europe 600 banks index fell 2.6 percent to its lowest closing level since November 2011, with Caixabank down 1.6 percent after Spanish lender warned it expected a 1.25 billion euro hit related to mortgage clauses.

Shares in Deutsche Bank and Credit Suisse touched record lows, as investors fret over the likely impact of Britain's June 23 vote to leave the EU on the European economy and its banks.

Property stocks bore the brunt of investors' concerns over Brexit, with the STOXX Europe 600 Real Estate index down 2.2 percent, after M&G suspended trading in its 4.4 billion pound UK property portfolio and feeder fund.

M&G's move comes after Standard Life taking similar measures earlier in the week.

Japanese stocks fell to more than one-week lows as renewed Brexit worries heightened uncertainty about the global economy and took a toll on exporters and financial stocks.

The Nikkei share average tumbled 1.9 percent to 15,378.99, the lowest closing level since June 28.