Tech Weighs on Equities While Dollar Extends Rally: Markets Wrap

(Bloomberg) -- Stocks pared most of their gains into the close as a rally in technology companies fizzled out.

The Nasdaq 100 notched its third straight day of losses after earlier climbing about 1%. Dip buyers helped push the S&P 500 higher, with defensive industries such as utilities and consumer staples among the best performers. The dollar rose to the highest level since November 2020, while Treasuries were little changed.

President Joe Biden and his aides scrambled to break a deadlock among Democrats that has stalled progress on his economic plans as the White House and Congress are staring down deadlines to keep the government running and avoid a default. Federal Reserve Chair Jerome Powell voiced cautious optimism that supply-chain disruptions lifting inflation would ultimately prove temporary. 

“Jitters surrounding elevated levels of inflation and slowing growth are likely to remain for some time,” said Fiona Cincotta, senior financial-markets analyst at City Index. “U.S. debt-ceiling discussions could be in focus amid a quiet economic calendar.”

The U.S. Treasury is likely to exhaust its ability to borrow as soon as late October, according to the Congressional Budget Office, in the latest warning to lawmakers following their failed efforts to address the debt ceiling this week.

QuickTake: What’s the Debt Ceiling and Will the U.S. Raise It?

A majority of investors harbor fears of persistently high inflation, with a 20% pullback in stocks seen as more likely than a 20% rally, according to a Citigroup Inc. survey of clients. Though most expected modest gains next year in the S&P 500, price pressures and a policy reversal by the Fed are big risks, according to the survey of more than 90 pension, mutual and hedge funds this month.

A gauge of U.S. pending home sales rebounded in August to a seven-month high as prospective buyers welcomed more attractive pricing and additional inventory. The figures suggest housing activity is firming after retreating from the record-high levels seen last year.

Some corporate highlights:

• Walgreens Boots Alliance Inc. is weighing an acquisition of Evolent Health Inc., the health-care group that has been under activist investor pressure to consider a sale, according to people familiar with the matter.
• Merck & Co. has agreed to buy drugmaker Acceleron Pharma Inc. for $180 per share, according to people familiar with the matter.
• Boeing Co. rallied after the aerospace giant was upgraded to outperform at Bernstein on prospects of a travel rebound.
• Morgan Stanley slumped after Oppenheimer downgraded the shares, citing a lack of upside to its valuation.

Here are some events to watch this week:

• House Financial Services Committee hearing on the Fed, Treasury’s pandemic response, Thursday
• China Caixin manufacturing PMI, non-manufacturing PMI, Thursday
• Univ. of Michigan sentiment, ISM manufacturing, U.S. construction spending, spending/personal income, Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.2% as of 4 p.m. New York time
• The Nasdaq 100 fell 0.1%
• The Dow Jones Industrial Average rose 0.3%
• The MSCI World index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.7%
• The euro fell 0.8% to $1.1594
• The British pound fell 0.9% to $1.3420
• The Japanese yen fell 0.4% to 111.99 per dollar

Bonds

• The yield on 10-year Treasuries fell one basis point to 1.53%
• Germany’s 10-year yield declined one basis point to -0.21%
• Britain’s 10-year yield was little changed at 0.99%

Commodities

• West Texas Intermediate crude fell 0.9% to $74.61 a barrel
• Gold futures fell 0.7% to $1,725.10 an ounce

©2021 Bloomberg L.P.