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Stocks get lift as oil prices rise, Fed bets boost dollar

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A screen displays the Dow Jones Industrial Average in New York. Reuters

NEW YORK – A rise in oil prices to three-week highs helped lift equity markets worldwide on Tuesday, while the US dollar jumped ahead of a meeting of Federal Reserve policymakers, who are expected to go ahead with the first of at least three US rate hikes this year.

US technology stocks lagged broader markets, continuing a sell-off sparked by reports of large-scale misuse of Facebook user data. Facebook Inc. shares lost 2.5 percent, continuing a slide that took nearly 7 percent off their price on Monday.

While stocks on Wall Street climbed, Facebook’s drop kept the gains in check.

The Dow Jones Industrial Average rose 116.36 points, or 0.47 percent, to 24,727.27, the S&P 500 gained 4.02 points, or 0.15 percent, to 2,716.94 and the Nasdaq Composite rose 20.06 points, or 0.27 percent, to 7,364.30.

There were other tech-related problems, as well. An accident with an Uber test car on Monday that resulted in the first fatality involving a fully autonomous vehicle also weighed on Silicon Valley sentiment.

Shares in European chipmakers faced pressure, while Germany’s SAP declined 0.5 percent, hit by a knock-on effect from US business software peer Oracle, whose quarterly revenue missed analysts’ estimates.

“There certainly are some stocks where valuations look somewhat stretched… so we’re focusing our exposure within the technology sector on the cheaper end of the market,” said Mike Bell, global market strategist at JPMorgan Asset Management.

“We’re a bit more cautious on the more expensive and some of the more popular names in the sector,” he added.

The US dollar climbed to a one-week high against the Japanese yen as traders limbered up for the start of a two-day Fed Reserve meeting.

With a quarter-point hike – its sixth since the Fed began raising interest rates in late 2015 – baked into market prices, major currencies were largely moving in ranges.

“Euro/dollar is being buffeted by cross currents, especially as both central banks (Fed and the ECB) are normalizing policy, but it needs an unexpected policy action to jolt markets,” said Neil Jones, Mizuho’s London head of currency hedge fund sales.

Markets expect at least two more US rate hikes after Wednesday this year, although analysts acknowledged that the central bank’s ‘dot plot’ could potentially point to as many as four.

The Fed bets kept long-term US bond yields edging higher, with short-dated yields up too.

The yield on 10-year Treasuries was up at almost 2.89 percent, 6 basis points below the four-year high of 2.957 percent touched a month ago. Two-year notes hit a 9-1/2-year high of 2.33 percent.

Among major commodities, oil prices jumped in line with the dollar as investors remained wary of growing crude supply, although tensions between Saudi Arabia and Iran provided some support.

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