US STOCKS-S&P 500 set to open at record high on rising rate cut hopes

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July 2, 2019
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US STOCKS-S&P 500 set to open at record high on rising rate cut hopes

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* U.S. 10-yr Treasury yields fall to lowest since Nov 2016

* Symantec jumps on report Broadcom in deal talks

* Futures up: Dow 0.21%, S&P 0.23%, Nasdaq 0.23% (Updates prices, add comments)

By Shreyashi Sanyal

July 3 (Reuters) – The S&P 500 index was set to open at a record high on Wednesday, bolstered by rising bets of an interest rate cut as global benchmark bond yields fell to new lows on growth fears.

Hopes of rate cuts by central banks were fueled by fears of a global recession due to the simmering trade tensions despite a recent truce between the United States and China, with the nomination of IMF chief Christine Lagarde to head the European Central Bank adding to the expectations.

The benchmark U.S. 10-year Treasury yields slipped to their lowest since November 2016, while the 10-year UK gilts yield fell below the Bank of England’s main policy rate for the first time in a decade.

“The indices are pointing to a higher opening as yields fall with both the 10-year Treasury yield and German Bunds signaling heightened worries over the global economy,” said Peter Cardillo, chief market economist at Spartan Capital Securities in a client note.

Traders now bet for about a 25% chance the Federal Reserve would cut borrowing costs by half a percentage point at its July 30-31 policy meeting.

Bets that the central bank would cut rates to preserve a decade-long U.S. expansion helped the S&P 500 and the Dow Jones indexes post their best June performance in decades.

The ADP National Employment Report, often considered a precursor to the Labor Department’s more comprehensive monthly non-farm payrolls data, showed U.S. private employers added 102,000 jobs in June, below economists’ expectations.

Trading volumes are expected to be thin due to shortened trading hours on Wednesday ahead of the July Fourth holiday.

At 8:49 a.m. ET, Dow e-minis were up 57 points, or 0.21%. S&P 500 e-minis were up 6.75 points, or 0.23% and Nasdaq 100 e-minis were up 18 points, or 0.23%.

Investors also awaited a Commerce Department report, due at 10:00 a.m. ET, that is likely to show factory orders fell 0.5% in May, after slipping 0.8% in April.

Among stocks, Symantec Corp surged 14.8% in premarket trading after sources told Reuters that chipmaker Broadcom Inc is in advanced talks to buy the cybersecurity firm. Broadcom fell 4.0%.

Shares of U.S.-listed gold miners gained as prices of the precious metal rose on safe-haven bets. (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila)