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

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 (NYSE: F), which posted poor second-quarter profit, as the U.S. market was range-bound for a second week.

Amazon.com shares (NASDAQ: AMZN) 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 (NASDAQ: GOOGL) 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 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.

Ford (NYSE: F) reported weaker-than-expected profit and declared the U.S. auto industry's long recovery was at an end, sending its stock and shares of other auto companies into a tailspin. Ford's stock fell 9.65 percent to $12.51.

But Facebook (NASDAQ: FB) opened at an all-time high of $128.31 after quarterly results handily beat analysts' estimates on Wednesday. Shares were up 1.3 percent. MSCI's all-country stock index <.MIWD00000PUS> rebounded, up 0.08 percent. The pan-regional FTSEurofirst 300 <.FTEU3> index in Europe closed down 1.0 percent to 1,338.28.

The Dow Jones industrial average <.DJI> closed down 15.82 points, or 0.09 percent, to 18,456.35. The S&P 500 <.SPX> rose 3.48 points, or 0.16 percent, to 2,170.06 and the Nasdaq Composite <.IXIC> added 15.17 points, or 0.3 percent, to 5,154.98.

In Japan, the Ministry of Finance has been lobbying hard for the BOJ to ease policy further and has prepared a statement it will publish in case the central bank eases, sources told Reuters.

The yen weakened to U.S. session lows of 105.50 on the report. It had gained earlier on Thursday on expectations that the BOJ could disappoint investors.

The dollar index <.DXY>, which tracks the greenback against a basket of six major rivals, fell 0.37 percent to 96.692. The euro rose 0.22 percent to $1.1079.

Benchmark 10-year Treasury notes gained 3/32 in price, pushing yields down to 1.5044 percent.

In Europe, investors bought more than 8 billion euros of new debt from Italy, a day before Rome faces a health check of its banks.

The extra yield investors demand to hold Italy's debt hit its highest since February 2015 this week at 14 basis points.

German 10-year yields held close to Wednesday's closing levels, showing little impact from the Fed's decision to keep rates on hold.

Oil prices fell nearly 2 percent, hitting three-month lows, after a fresh stock build at the Cushing, Oklahoma delivery hub for U.S. futures added to concerns that producers were pumping more crude than needed.

Brent crude settled down 77 cents at $42.70 a barrel. U.S. light crude declined 78 cents to settle at $41.14.

(Addition reporting by Nigel Stephenson; Editing by Nick Zieminski and Meredith Mazzilli)

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