US stocks dropped on the final day of an August that has seen everything from equities to Treasuries and commodities retreat as central banks around the globe stepped up their fights against inflation.
(Bloomberg) — US stocks dropped on the final day of an August that has seen everything from equities to Treasuries and commodities retreat as central banks around the globe stepped up their fights against inflation.
The S&P 500 and the Nasdaq 100 fell, after fluctuating between modest gains and losses for most of the session. Treasuries were little changed after paring declines that were led by a selloff in UK and euro-zone bonds.
Investors have been sorting through sometimes-conflicting economic data. Job openings data on Tuesday underscored tightness in the labor market, but revamped ADP data on Wednesday showed US companies increased headcount at a relatively sluggish pace in August. With Federal Reserve officials determined to act to tamp down inflation, all eyes will be on the job report on Friday for further policy clues.
“What’s clear is that predicting this market is not clean cut,” Angeline Newman, a managing director at UBS Global Wealth Management, said on Bloomberg Television. “We are living in a world where conflicting economic signals are making the path of monetary policy very difficult to determine.”
The Fed has now ditched its soft landing goal and is instead aiming for a “growth recession,” which would mean a protracted period of meager growth and rising unemployment.
Oil is heading for a third monthly drop — the longest losing run in more than two years — hampered by the likelihood of slower global growth.
Meanwhile, euro-area inflation accelerated to another all-time high, strengthening the case for the European Central Bank to consider a jumbo interest-rate hike when it meets next week. ECB Governing Council member Joachim Nagel urged a “strong” reaction. Money markets have now priced in 125 basis points of tightening from the ECB by October, which implies a half-point hike and a three-quarter point increase spread over its next two policy decisions.
Investors are also contending with mounting friction between Beijing and Taipei after Taiwanese soldiers fired shots to ward off civilian drones and evaluating the latest Chinese data, which indicated factory activity shrank for a second month. Power shortages, a property sector crisis and Covid outbreaks all took a toll.
Here are some key events to watch this week:
- ECB Governing Council members due to speak at event Tuesday through Sept. 2
- China Caixin manufacturing PMI, Thursday
- US nonfarm payrolls, Friday
- UK leadership ballot closes Friday. Winner announced Sept. 5
Will Chinese sovereign bonds outperform Treasuries? China is the theme of this week’s MLIV Pulse survey. Click here to participate anonymously.
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.4% as of 2:01 p.m. New York time
- The Nasdaq 100 fell 0.3%
- The Dow Jones Industrial Average fell 0.5%
- The MSCI World index fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.4% to $1.0052
- The British pound fell 0.3% to $1.1620
- The Japanese yen was little changed at 138.75 per dollar
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.12%
- Germany’s 10-year yield advanced three basis points to 1.54%
- Britain’s 10-year yield advanced 10 basis points to 2.80%
Commodities
- West Texas Intermediate crude fell 1.6% to $90.19 a barrel
- Gold futures fell 0.6% to $1,725.20 an ounce
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