Stocks Snap Five-Day Winning Streak; Oil Declines: Markets Wrap
(Bloomberg) -- U.S. stocks fell for the first time in six trading sessions while yields on benchmark Treasury notes lingered close to more than one-year highs as investors weighed the strength of the global economic recovery.
The S&P 500 closed lower after setting all-time highs for three consecutive trading sessions, led by declines in the energy and industrials sectors. Apple Inc. and Microsoft Corp. lifted the tech-heavy Nasdaq 100, while the Dow Jones Industrial Average also fell from a record high, with Boeing Co. and Goldman Sachs Group Inc. among the biggest decliners. Treasury 10-year yields fluctuated as the Federal Reserve began its two-day policy meeting.
“The actual growth numbers keep coming out ahead of almost all of what experts predict, so the market is trying to sort out what that means over the longer term,” said Stephen Dover, chief market strategist and head of the Franklin Templeton Investment Institute. “Growth had so far outperformed value that there was a rotation, but a lot of that rotation has happened, and so now they’re closer to each other and there’s a tug and pull back and forth between those areas and sectors.”
In Europe, traders shrugged off decisions by Germany, France and Italy to suspend the AstraZeneca Plc vaccine ahead of a meeting of regional health ministers to discuss the future of the Covid-19 shot. The Stoxx 600 Index advanced 0.9%.
Markets saw modest gains in Japan and China, where investors were watching for a possible broader crackdown on the internet sector. Oil retreated for a third day, while the dollar was mixed versus its major peers.
With the global economy increasingly on a path out of the pandemic, focus turns to the Fed’s communications on Wednesday, which will include fresh economic and interest-rate projections. Reflation trades stand to benefit if the central bank maintains a hands-off approach to the recent rise in yields. Bets on a faster economic recovery have already helped push one market gauge of inflation to its highest level since 2008, and a renewed climb in yields could spur the rotation from growth to value stocks.
“As bond vol drops and rates are pinned by European risk near term, the pain trade that started yesterday continues,” with growth stocks outperforming, said Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “Eventually bond yields will catch up to inflation expectations again.”
Looking further ahead, investors are assessing the potential for an infrastructure spending package and tax increases in the U.S.
Elsewhere, Bitcoin traded around $56,000, down from a weekend peak above $61,000.
These are some key events this week:
- Fed Chair Jerome Powell will likely reaffirm his steady policy stance at the Fed policy meeting Wednesday.
- Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.
- Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.
These are the main moves in markets:
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