September 23, 2020

Stocks and Bonds: Stocks Finish Flat as Investors Await a Greek Debt Deal

Markets ended flat on Monday as few developments affected stocks except investor hopes that Greece would eventually reach a deal with private creditors on lowering its debt.

Greece’s private creditors are being asked to accept longer maturities and lower interest rates on new bonds swapped for their existing ones.

The major Wall Street stock indexes wavered little all day. The Standard Poor’s 500-stock index ended up 0.05 percent, or 0.62 points, to 1,316. The Dow Jones industrial average fell 0.09 percent, or 11.66 points, to 12,708.82. The Nasdaq composite index also lost 0.09 percent, or 2.53 points, to close at 2,784.17.

Greece, which is negotiating alongside fellow members of the euro zone and the International Monetary Fund, wants interest rates as low as 3 percent on the new bonds. But the private creditors believe that is too low, and are aiming for about 4.5 percent.

Both sides said a deal was nevertheless close, heartening investors. The euro was the main beneficiary, climbing 1.3 percent to $1.3033.

Greek officials say negotiations on the private debt write-down are continuing by phone, with no appointment yet for new face-to-face talks.

Greece was to be the main topic of discussion at Monday’s meeting in Brussels of the finance ministers for the 17 European Union members that use the euro.

In Europe, the FTSE 100 index of leading British shares closed up 0.9 percent, while the DAX in Germany rose 0.5 percent. The CAC 40 in France was also 0.5 percent higher.

Optimism that Greece would clinch a deal has brightened market sentiment this year, along with a run of successful European bond auctions and solid economic and corporate news, not least from the United States and China. Many stock indexes have risen to five-month highs, while the euro has headed back toward the $1.30 mark.

Though the Federal Reserve is expected to keep its loose monetary policy unchanged, there will be great interest in the outcome of this week’s rate-setting meeting. It will be the first time the Fed will publish its interest rate forecasts out to 2016, part of a strategy to enhance communication with financial markets.

Investors will be particularly interested to see how long policy makers expect interest rates to remain low. Previously, the Fed said it expected to keep them low until the middle of 2013.

“Most, ourselves included, expect the projections to suggest the Fed sees rates on hold well into 2014,” said Adam Cole, an analyst at RBC Capital Markets.

In the oil markets, traders were watching developments in the Persian Gulf. Iran has threatened to close the Strait of Hormuz if the United States and other countries impose more sanctions on it because of its nuclear program. Many analysts doubt that Iran could set up a blockade for long, but any supply shortages would cause supplies to tighten. Benchmark crude was up $1.25 to $99.58 a barrel on the New York Mercantile Exchange.

The Treasury’s 10-year note fell 9/32, to 99 16/32. The yield was 2.06 percent, up from 2.03 percent late Friday.

Article source: http://feeds.nytimes.com/click.phdo?i=a7ae1bd6b53f32d370b89c7611de0e16

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