Stocks Pare Rebound With Consumer Prices in Focus: Markets Wrap
(Bloomberg) -- U.S. equities pared back a rebound Thursday after a selloff in the previous session due to fears high inflation could spur tighter monetary policy.
The S&P 500 gained less than 0.1% -- led by gains in materials and technology -- after falling 0.8% Wednesday in its worst slump in more than a month. Tesla Inc. fluctuated after filings showed Chief Executive Officer Elon Musk unloaded $5 billion of stock. Meanwhile, Walt Disney Co. slid and Beyond Meat Inc. plunged after disappointing quarterly figures.
The U.S. cash Treasury market was closed for a holiday.
Investors are bracing for changes in monetary policy sooner rather than later after higher-than-expected consumer prices dealt a blow to arguments inflation is transitory. Persistently high inflation could force the Federal Reserve to taper at a more substantial rate or hike interest rates faster than anticipated. At the same time, equities are hovering near all-time highs as strong earnings and economic growth prospects have propelled the stock market higher.
Clearbridge Investments’ Jeff Schulze said the recent slide in equities “was a combination of profit-taking after a nice run from the October lows but then also some concerns about margin and overall earnings in 2022.”
The firm’s investment strategist, in an interview by phone, said “although inflation hasn’t made a dent in third-quarter earnings, if we stay at these uncomfortable levels of inflation for three or four more quarters, this is definitely something that could impact margins and create demand destruction in the economy, both of which are headwinds to earnings.”
Instinet LLC’s Frank Cappelleri added Wednesday’s decline was also “right on cue” from a seasonality perspective.
“Over the last two decades, November’s weakest part has occurred in the middle of the month,” Cappelleri wrote in a note. “The damage so far is slight, and this could very well be the start of the next bullish pattern, regardless if yesterday’s dip encourages immediate dip buying or not.”
Oil struggled for direction as investors weighed the odds that the White House will intervene to cool prices. Gold approached a five-month high and Bitcoin hovered near $65,000. In Europe, stocks gained while in Asia, Chinese equities rallied on speculation the government will ease the struggle with property developers. The dollar was stronger against major peers.
For more market analysis, read our MLIV blog.
- S&P 500 were little changed as of 4 p.m. New York time
- Dow Jones Industrial Average fell 0.4%
- Nasdaq 100 gained 0.3%
- The MSCI World index was little changed
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.3% to $1.1447
- The British pound fell 0.3% to $1.3361
- The Japanese yen fell 0.1% to 114.08 per dollar
- Germany’s 10-year yield advanced two basis points to -0.23%
- Britain’s 10-year yield was little changed at 0.92%
- West Texas Intermediate crude fell 0.3% to $81.10 a barrel
- Gold futures rose 0.9% to $1,865.30 an ounce
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