Wall Street edges higher as traders await interest rate hints

US stocks advanced for a third session on Monday and bond yields drifted lower as investors awaited crucial data and central banker comments to give more direction on the future path for interest rates.

The US blue-chip S&P 500 and the tech-heavy Nasdaq Composite were up 0.2 per cent each in mid-afternoon trade. Both were near their lowest levels of the day, having earlier traded roughly 1 per cent higher.

Investors have in recent weeks been forced to readjust forecasts for interest rates and economic growth in the US and Europe after a succession of data in February indicated a series of aggressive rate rises had yet to fully tame inflation.

Yields on two-year Treasuries, which are more sensitive to interest rate changes, rose 0.04 percentage points to 4.89 per cent, but held below their 15-plus year peak near 4.95 per cent last week.

The yield on the 10-year Treasury note was up 0.02 per cent at 3.98 per cent, having hit 4 per cent, a three-month high, last week.

The moves come ahead of US Federal Reserve chair Jay Powell’s semi-annual testimony to Congress over the next two days and the latest non-farm payroll report on Friday, which could potentially provide a dramatic end to the week.

“Further labour market tightness could stoke persistently high core inflation and spur the Fed to keep rates higher for longer,” said analysts at BlackRock in an investment outlook note. “We’re also watching China’s trade data to see how much pressure remains on exports.”

European stocks closed mixed although worries about Chinese growth weighed on commodity prices and dragged the FTSE 100 lower.

Miners Anglo American and Rio Tinto lost 3.7 per cent and 2.8 per cent respectively as London’s blue-chip index shed 0.2 per cent.

Other markets recorded gains: Germany’s Dax was up 0.5 per cent and France’s CAC 40 rose 0.3 per cent. Europe’s benchmark Stoxx 600 gave up early gains to finish flat.

European stocks were dented somewhat by the release of European retail sales data. Month-on-month growth was 0.3 per cent, up from a fall of 1.7 per cent but below forecasts for a 1.3 per cent rise.

“We’ve had surveys which held up better than expected, but the retail sales data is the first hard bit of data,” said Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics.

Christine Lagarde, president of the European Central Bank, is due to speak at a World Trade Organization event on Wednesday.

Yields on 10-year German Bunds rose 0.01 percentage points to 2.73 per cent.

The US dollar index, which measures the greenback against a basket of six peer currencies, fell 0.2 per cent.

Brent crude rose 0.2 per cent to $86.01 a barrel, while WTI, the US equivalent, shed 0.6 per cent, falling to $80.13 a barrel.