US stocks rose as dip buyers emerged after a selloff sent the benchmark to the lowest intraday level since 2020. The dollar erased gains and Treasury yields traded off multiyear highs.
(Bloomberg) — US stocks rose as dip buyers emerged after a selloff sent the benchmark to the lowest intraday level since 2020. The dollar erased gains and Treasury yields traded off multiyear highs.
The S&P 500 posted a modest gain, retracing losses after a New York Fed survey showed near-term consumer inflation expectations cooled though were less optimistic longer term. Treasuries were mixed, with yields on the short-end of the curve falling from multiyear highs.
The mood remains fragile after a four-day losing streak wiped $1.6 trillion off the value of the S&P 500 Index. US inflation data Thursday may seal the case for another 75-basis-point interest-rate increase in the absence of a major shortfall, given the swaps market is almost fully pricing in such a move at the Federal Reserve’s next meeting. Nor have officials given any inclination to pause their rate-hiking cycle in the near future.
Strategists are also bracing for weak profits against a drumbeat of warnings over the rising risk of a global recession. The International Monetary Fund joined the refrain, warning of a worsening outlook as efforts to curb inflation may add to damage from the war in Ukraine and China’s slowdown. Big US banks kick off the third-quarter earnings season in earnest later this week.
“We have not seen the impact of tightening,” Michael Kelly, head of the multi-asset team at PineBridge Investments told Bloomberg TV. “That lies ahead and when we see that, it’s another leg down for risk assets.”
Yields on two-year Treasuries slipped to around 4.27% after earlier hitting the highest since 2007. The 30-year yield briefly touched a fresh 2014 high in the US session.
Turmoil in UK bond markets eased Tuesday as the Bank of England was forced to expand its emergency measures to tackle what it called “fire-sale dynamics.”
Meanwhile, Russian President Vladimir Putin threatened further missile attacks on Ukraine after hitting Kyiv and other cities in the most intense barrage of strikes since the first days of its invasion.
“It’s little wonder investors enter the week in a dreary mood, especially with headlines from Ukraine signaling a further escalation in geopolitical tensions,” Christopher Smart, chief global strategist at Barings, said in a note.
With world growth under pressure, US oil futures tumbled about 2%, giving up more of last week’s 17% rally.
Key events this week:
- Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
- Fed’s Loretta Mester speaks, Tuesday
- BOE’s Andrew Bailey speaks, Tuesday
- FOMC minutes for September meeting, Wednesday
- US PPI, mortgage applications, Wednesday
- OPEC Monthly Oil Market Report, Wednesday
- Fed’s Michelle Bowman and Neel Kashkari speak
- ECB’s Christine Lagarde speaks
- US CPI, initial jobless claims, Thursday
- G-20 finance ministers and central bankers meet, Thursday
- China CPI, PPI, trade, Friday
- US retail sales, business inventories, University of Michigan consumer sentiment, Friday
- BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.2% as of 11:45 a.m. New York time
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average rose 0.9%
- The Stoxx Europe 600 fell 0.6%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $0.9731
- The British pound rose 0.7% to $1.1132
- The Japanese yen was little changed at 145.63 per dollar
Cryptocurrencies
- Bitcoin fell 0.5% to $19,151.76
- Ether fell 1.2% to $1,291.75
Bonds
- The yield on 10-year Treasuries advanced one basis point to 3.89%
- Germany’s 10-year yield declined four basis points to 2.30%
- Britain’s 10-year yield declined four basis points to 4.44%
Commodities
- West Texas Intermediate crude fell 2.1% to $89.25 a barrel
- Gold futures rose 0.6% to $1,685.80 an ounce
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