US stocks fell after a report showed US year-ahead inflation expectations rose for the first time in seven months. The dollar gained and Treasuries fell.
(Bloomberg) — US stocks fell after a report showed US year-ahead inflation expectations rose for the first time in seven months.
The dollar gained and Treasuries fell.
The S&P 500 and the tech-heavy Nasdaq 100 turned sharply lower after a University of Michigan survey showed year-ahead inflation expectations rose in early October and the long-term outlook also crept up.
Treasuries fell, with the policy sensitive two-year yield rising back toward 4.5%.
The uptick is potentially worrisome for the Federal Reserve’s efforts to keep expectations anchored. It also follows government figures on Thursday that showed a key measure of consumer prices accelerated in September to a 40-year high.
On Thursday, stocks roared back from early losses to post solid gains.
“Yesterday you had this amazing, powerful intraday rally that was completely wrong,” said Phil Orlando, chief equity market strategist at Federated Hermes.
“Then you look at the Michigan numbers this morning that’s consistent with what we’re seeing in the economy, and the stock market now is down to reflect that number. That’s correct.”
In Corporate America, big banks including JPMorgan Chase & Co.
and Wells Fargo & Co. rose after reporting results, while Morgan Stanley slipped as equity trading revenue disappointed in the first wave of results. US banks are expected to post the biggest profit decline of any S&P 500 Index sector, according to data compiled by Bloomberg Intelligence.
The fear is Fed tightening will spark defaults and force banks to set aside higher provisions against losses.
Another report showed US retail sales stagnated in September, suggesting inflation was starting to curb consumer purchases.
Excluding gasoline, retail sales were up 0.1% compared with a forecast for an advance of 0.2%.
On the geopolitical front, Russian President Vladamir Putin said there’s no need for massive strikes on Ukraine right now and a direct clash with NATO would be catastrophic.
He also said that Moscow’s aim is not to “destroy” its neighbor.
Elsewhere, oil headed for weekly losses as signs of a global economic slowdown and tighter monetary policy threaten to sap energy consumption.
The International Energy Agency earlier warned crude production cuts agreed by OPEC+ group risked causing a price spike that tipped the global economy into recession.
Crypto assets gained, with Bitcoin touching a one-week high, within reach of surpassing the $20,000 level.
Some of the main moves in markets:
Stocks
- The S&P 500 fell 1.3% as of 11:20 a.m.
New York time
- The Nasdaq 100 fell 1.8%
- The Dow Jones Industrial Average fell 0.5%
- The Stoxx Europe 600 rose 0.5%
- The MSCI World index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index rose 0.5%
- The euro fell 0.3% to $0.9748
- The British pound fell 1% to $1.1218
- The Japanese yen fell 0.9% to 148.49 per dollar
Cryptocurrencies
- Bitcoin was little changed at $19,370.89
- Ether rose 1.4% to $1,311.43
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 4.01%
- Germany’s 10-year yield advanced seven basis points to 2.35%
- Britain’s 10-year yield advanced 13 basis points to 4.32%
Commodities
- West Texas Intermediate crude fell 3.4% to $86.06 a barrel
- Gold futures fell 1.4% to $1,654.20 an ounce
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