U.S. Stocks, Greenback Slip Amid Political Turmoil: Markets Wrap

Bloomberg.- U.S. stocks edged lower, while Treasuries rose as investors assessed the impact on financial markets from the latest legal drama engulfing Donald Trump’s presidency. The dollar declined.

The S&P 500 Index retreated for the first time in five days after touching an all-time high Tuesday. Equities took a knock from Michael Cohen’s guilty plea on campaign finance charges, though losses remain muted as the bull market became the longest on record. Target Corp. and Lowes Cos. both rose after reporting earnings.

The greenback extended its longest losing streak in six months to a fifth day, as the euro rallied on data showing the biggest jump in wages in six years. The 10-year Treasury yield dropped ahead of the release of Federal Reserve meeting minutes.

While all eyes focused on the legal drama in Washington, U.S. stocks remained near records amid double-digit corporate profit growth. At the same time, benchmark Treasury yields have held below 3 percent even as the Fed remains on track to raise rates amid a strengthening economy. Add to the mix trade wars and turmoil in emerging markets. Some clarity could come from a meeting of central bankers on Friday in Jackson Hole, Wyoming.

“This market will focus on a couple of factors: does this change the math for the mid-term elections, does this cause polls to shift in a material way?” said Andrew Sheets, chief cross-asset strategist at Morgan Stanley, in a Bloomberg TV interview. “The market’s going to be watching very closely Friday in Jackson Hole. Does the Fed continue to sound like they are going to continue to tighten policy?”

Elsewhere, oil futures rallied in New York after an industry group reported a steep drop in U.S. crude stockpiles. Mexico’s peso jumped as the nation edges toward a new Nafta deal.