U.S. stocks rebound, yen weakens on BOJ stimulus report

Thu Jul 28, 2016 4:52pm EDT
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By Herbert Lash

NEW YORK (Reuters) - U.S. stocks mostly rose on Thursday in anticipation of results from tech heavyweights Alphabet and Amazon, while the yen eased after Reuters reported the Bank of Japan was considering expanding monetary stimulus to address signs of weak inflation.

Expectations of further stimulus in Japan have dominated currency trading in recent weeks and overshadowed the U.S. central bank's policy-setting statement on Wednesday, when the Federal Reserve indicated it was in no rush to raise interest rates.

On Wall Street, stocks initially were dragged lower by Ford Motor (F.N: Quote), which posted poor second-quarter profit, as the U.S. market was range-bound for a second week.

Amazon.com shares (AMZN.O: Quote) rose 2.2 percent in anticipation of its quarterly results after the bell, and added about 2 percent following the close. Google parent company Alphabet (GOOGL.O: Quote) also reported results after the bell, with shares gaining more than 4 percent in extended trade.

"Tech has been pretty much the strongest sector over the last month. Momentum players are focusing to buy on pullbacks," said Michael Matousek, head trader at U.S. Global Investors in San Antonio, Texas. "With Amazon, if it's a good beat we will be off to the races because it's already pushing up to 52-week highs."

Equity markets earlier in Europe retreated after Royal Dutch Shell (RDSa.L: Quote) reported a more than 70 percent fall in quarterly profit that was well below analysts' estimates.

Investors are concerned by a slowdown in growth overseas, which will crimp many American companies even as the U.S. economy expands, as about 40 percent of their revenue is generated abroad, said James Swanson, chief investment strategist at MFS Investment Management in Boston.

"These global companies do not have much power to raise prices, but we know labor costs around the world are rising. That's the squeeze that I'm worried about," Swanson said.   Continued...

Traders work by the post that trades Baker Hughes on the floor of the New York Stock Exchange November 17, 2014.  REUTERS/Brendan McDermid