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July 1, 2026 - 18:07
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(Bloomberg) — Signs of economic strength alongside easing price pressures spurred a rebound in stocks, with Federal Reserve Chair Kevin Warsh saying inflation risks have come down.Economically sensitive corners of the market paced gains in the S&P 500 after data showed manufacturing activity expanded for a sixth straight month as a war-driven surge in input costs eased. A rally in software firms also buoyed sentiment, offsetting a drop in chipmakers. Treasury two-year yields fell. Oil slid as the US said indirect talks with Iran were positive.“Expectations of inflation over the first four weeks of this period have come down, inflation risks have come down,” Warsh said Wednesday at the European Central Bank’s annual Forum on Central Banking in Sintra, Portugal. He doubled down on a message from his first press conference as Fed chairman last month that the central bank will deliver price stability.Warsh repeated that he isn’t going to offer “forward guidance” with regard to upcoming interest-rate policy, marking a step-change at the US central bank.Meantime, he tapped former Bank of England Governor Mervyn King to co-chair the US central bank’s new task force on communications. Warsh has vowed to shake up how the Fed communicates with investors and the public, including how policymakers signal their outlook for monetary policy.The Institute for Supply Management’s manufacturing gauge held close to a four-year high in June. Prices paid for raw materials rose at a much slower pace. The group’s price measure saw the largest single-month drop since July 2022, as an interim agreement between the US and Iran sent oil prices tumbling.“This will provide some comfort for the Fed, as it suggests that second-round inflation effects from the war have been averted,” said Ariane Curtis at Capital Economics.In the run-up to the US payrolls reading, data showed private-sector job creation was solid again in June, capping the best three-month stretch for hiring in more than a year.The government’s employment report due Thursday, which also includes public-sector hiring, is expected to show US employers added 115,000 jobs in June. That would mark the strongest six-month stretch for hiring since mid-2024.“A number a bit above 100,000 and stability in the unemployment rate is the best-case scenario for this market, as it reinforces solid economic growth, but it won’t make rate hikes more likely,” said Tom Essaye at The Sevens Report.Corporate Highlights:Meta Platforms Inc. is developing plans for a cloud infrastructure business that will sell access to AI computing power and models, setting up a new vector of competition with industry leaders like Amazon Web Services, Microsoft Azure and Google Cloud. Alphabet Inc.’s Google was ordered to pay almost $2 billion to Klarna Group Plc’s Pricerunner unit in a dispute over the search-engine giant’s abuse of power in the market for comparison shopping services. Software shares rose after Guggenheim upgraded a trio of companies, saying fears that artificial intelligence poses a mortal threat to the sector are overdone. Alcoa Corp. has agreed to buy South32 Ltd.’s bauxite, alumina and aluminum assets in a deal worth as much as $5.6 billion, cementing its position as a top producer as long-term demand strengthens and the Iran war exposes supply concerns. General Mills Inc. posted fourth-quarter profit that beat Wall Street expectations, lifted by higher prices. Some of the main moves in markets:StocksThe S&P 500 rose 0.2% as of 12:04 p.m. New York time The Nasdaq 100 fell 1% The Dow Jones Industrial Average rose 0.6% The Stoxx Europe 600 fell 0.4% The MSCI World Index was little changed CurrenciesThe Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.3% to $1.1391 The British pound rose 0.2% to $1.3284 The Japanese yen rose 0.1% to 162.37 per dollar CryptocurrenciesBitcoin rose 2.4% to $60,064.92 Ether rose 2.7% to $1,616.05 BondsThe yield on 10-year Treasuries was little changed at 4.46% Germany’s 10-year yield advanced two basis points to 2.88% Britain’s 10-year yield was little changed at 4.76% The yield on 2-year Treasuries declined two basis points to 4.15% The yield on 30-year Treasuries was little changed at 4.96% CommoditiesWest Texas Intermediate crude fell 2% to $68.10 a barrel Spot gold rose 1.9% to $4,085.28 an ounce ©2026 Bloomberg L.P.
