(Bloomberg) — Stocks fluctuated on concern that inflation could pose a challenge to the global economic rebound, forcing central banks to raise interest rates sooner than expected.
Traders took some risk off the table as data showed new U.S. home construction slowed down — suggesting builders are struggling to break ground on projects amid high materials prices and ongoing labor shortages. Target Corp. sank after warning that cost pressures are creeping up, stoking fears that inflation will dent profits at retailers. The technology-heavy Nasdaq 100 outperformed, led by a rally in giants Tesla Inc. and Apple Inc.
“While we remain structurally bullish on stocks, we do anticipate a push-and-pull of market dynamics into year-end given inflation concerns, supply-chain pressures, labor shortages, and fiscal uncertainty,” said Andrea Bevis, senior vice president at UBS Private Wealth Management.
Read: Inflation Is Here. The Big Debate Is, Will It Stay?: QuickTake
Bond traders are bracing for a key test as the Treasury looks to sell its first long-dated debt since inflation worries spooked buyers at last week’s 30-year auction. The widely watched 5-to-30 year yield curve steepened for a fourth day as long-end rates rose heading into the day’s 20-year debt auction, while short-end rates dipped slightly.
Markets could face a rocky time ahead as the global economy seeks to emerge from the abrupt impact of the pandemic, according to Goldman Sachs Group Inc. Chief Executive Officer David Solomon. In case interest rates move up, that “will take some of the exuberance out of certain markets,” he said in an interview at the Bloomberg New Economy Forum in Singapore.
Read: Powell’s Five Inflation Benchmarks Are Starting to Flash Amber
Inflation is “clearly not as transitory as some might have hoped, but we’re not at the point yet where we could definitively say that it’s ingrained or persistent,” said Giorgio Caputo, senior portfolio manager at J O Hambro Capital Management.
The worst quarter for the S&P 500 since the start of the pandemic appears to have driven away some do-it-yourself investors. The retail trading surge that began with pandemic lockdowns has now abated, as total equity volume from individual investors fell to 19% in the third quarter, down from 24% at the start of this year, according to Securities and Exchange Commission and market data compiled by Bloomberg Intelligence.
Some other corporate highlights:
Home-improvement giant Lowe’s Cos. raised its sales forecast for this year and reported stronger-than-expected revenue.
TJX Cos. climbed after the off-price retailer’s results topped estimates.
American Airlines Group Inc. expects global travel to rebound to pre-pandemic levels by this coming summer, said Chief Executive Officer Doug Parker.
Visa Inc. slumped as Amazon.com Inc. will stop accepting purchases made with credit cards issued in the U.K. starting next year.
Read: Debt-Cap Jitters Return to Treasuries as Yellen Narrows Timing
What to watch this week:
Conference Board U.S. leading index, initial jobless claims. Thursday
Fed’s Richard Clarida and Mary Daly speak at Asia Economic Policy Conference. Friday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 11:56 a.m. New York time
The Nasdaq 100 rose 0.4%
The Dow Jones Industrial Average fell 0.4%
The Stoxx Europe 600 rose 0.1%
The MSCI World index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1315
The British pound rose 0.4% to $1.3479
The Japanese yen rose 0.4% to 114.37 per dollar
Bonds
The yield on 10-year Treasuries declined one basis point to 1.62%
Germany’s 10-year yield was little changed at -0.25%
Britain’s 10-year yield declined three basis points to 0.96%
Commodities
West Texas Intermediate crude fell 2.3% to $78.92 a barrel
Gold futures rose 0.7% to $1,867.10 an ounce
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