US stocks edge higher, Treasury yields rise amid calming credit, trade worries

By Stephen Culp NEW YORK (Reuters) – Wall Street stocks advanced and U.S. Treasury yields rebounded on Friday as investors assessed the health of regional banks and President Donald Trump said his face-to-face trade talks with Chinese President Xi Jinping were continuing. All three major U.S. stock indexes gained ground after struggling for direction in early trade, remaining on track for weekly gains. Benchmark Treasury yields and the dollar edged higher, while gold pulled back after a record run sent the precious metal to all-time highs. Concerns about possible systemic credit problems in the banking sector eased a day after Zions disclosed it would take a $50 million loan loss in the third quarter and Western Alliance launched a lawsuit alleging fraud by an investment firm. The KBW Regional Bank Index advanced 0.7% in a partial recovery from Thursday’s 5.0% drop. “It took a night to sleep on it, but some calm has come over the probably overblown concerns in the regional banking space,” said Ryan Detrick, chief market strategist at Carson Group in Omaha. “The truth is the financial sector is probably still on solid footing; just a few companies have had bad news, but it’s not systemic.” Trade tensions between Washington and Beijing were calmed by Trump’s assurances that his proposed 100% tariff on Chinese imports would not be sustainable. He confirmed he will meet Chinese President Xi Jinping in South Korea in two weeks. “We’ve seen this movie before,” Detrick added. “A week ago President Trump was talking 100% tariffs and the market had its worst selloff in months and now he’s clearly throwing some water on that fire and saying he and President Xi have a good relationship.” The first official week of the third quarter earnings season is in the books, with 58% of companies in the S&P 500 having reported. Of those, 86% delivered stronger than expected results. Analysts now expect third-quarter S&P 500 earnings growth of 9.3% on a year-over-year basis, up from 8.8% as of Oct. 1, according to LSEG data. The Dow Jones Industrial Average rose 282.75 points, or 0.61%, to 46,233.57, the S&P 500 rose 36.72 points, or 0.55%, to 6,665.82 and the Nasdaq Composite rose 128.82 points, or 0.597%, or 0.597%. European shares closed lower as signs of credit stress in US regional banks dampened investor risk appetite, driving them to safe-haven assets. MSCI’s benchmark of shares around the world rose 0.09 points, or 0.01%, to 984.48. The pan-European STOXX 600 index fell 0.95%, while Europe’s broader FTSEurofirst 300 index fell 20.72 points or 0.91%. Emerging market shares fell 16.75 points, or 1.21%, to 1,362.21. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.24% lower at 706.02, while Japan’s Nikkei fell 695.59 points, or 1.44%, to 47,582.15. US Treasury yields rose and the dollar strengthened as concerns stemming from the escalating trade war and regional banks’ credit quality eased. However, the dollar remained on course for a weekly loss. The yield on benchmark US 10-year notes rose 2.3 basis points to 3.999%, from 3.976% late Thursday. The 30-year bond yield rose 1.6 basis points to 4.5986% from 4.583% in the previous session. The 2-year note yield rose 3.1 basis points to 3.457%, from 3.426% late Thursday. The dollar index, which measures the dollar against a basket of currencies including the yen and the euro, rose 0.16% to 98.42, with the euro down 0.15% at $1.167. Against the Japanese yen, the dollar strengthened 0.02% to 150.45. Oil prices stabilized but lost ground on the week amid the fog of global supply uncertainty. US crude rose 0.14% to settle at $57.54 a barrel, while Brent settled at $61.29 a barrel, up 0.38% on the day. Gold prices retreated from record highs, pressured by a stronger dollar. Spot gold fell 2.03% to $4,237.59 an ounce. U.S. gold futures fell 1.3% to $4,224.60 an ounce. (Reporting by Stephen Culp; Additional reporting by Ian Withers and Stella Qiu; Editing by Nia Williams and Nick Zieminski)