US stocks struggled for direction as investors mulled the Federal Reserve’s path of interest-rate hikes after hawkish comments from central bank Governor Christopher Waller.
(Bloomberg) — US stocks struggled for direction as investors mulled the Federal Reserve’s path of interest-rate hikes after hawkish comments from central bank Governor Christopher Waller.
Traders are awaiting comments from Fed Vice Chair Lael Brainard, who is set to discuss the economy outlook at an event hosted by Bloomberg News in Washington.
The S&P 500 swung between modest gains and losses. The tech-heavy Nasdaq 100, which is typically more sensitive to interest rates, fell as much as 1.3% before paring declines. It was dragged by losses in Microsoft Corp., Amazon.com Inc. and Apple Inc.
The dollar turned higher after weekend comments from Waller that policymakers had “a ways to go” before ending interest-rate hikes. Treasury yields rose, with the 10-year rate hovering around 3.88%.
Signs of cooling in US inflation and the prospects of a dovish tilt by the Fed had propelled the S&P 500 to its best week since June. But some of the world’s largest money managers are still clinging to risk-off positioning against the threat of entrenched inflation. JPMorgan Asset Management has a record allocation in cash in at least one of its strategies while a hedge fund solutions team at UBS Group AG is staying defensive.
“Even the biggest bull would have to say that investors need to be careful about extrapolating last week’s slightly better CPI number into something that is giving investors definitive proof that the inflation is about to decline in a substantial manner over the coming weeks and months,” Matt Maley, chief market strategist at Miller Tabak + Co., wrote.
Read more: Wall Street Managers Are Pushing Back on Easing Inflation Hopes
Meanwhile, Chinese stocks listed in the US are on track to extend their rally to a third day, after Joe Biden and Xi Jinping called for reduced tensions between the world’s two biggest economies during a meeting in Bali, Indonesia. The White House said in a statement afterward that Secretary of State Antony Blinken would travel to China.
Cryptocurrencies rose on plans by Binance Holdings Ltd. to set up a recovery fund to stabilize the industry after FTX’s bankruptcy sparked market-wide losses of around $200 billion in the past week.
Key events this week:
- Fed’s John Williams moderates panel, Monday
- China retail sales, industrial production, surveyed jobless, Tuesday
- Former US President Donald Trump plans to make an announcement, Tuesday
- US empire manufacturing, PPI, Tuesday
- US business inventories, cross-border investment, retail sales, industrial production, Wednesday
- Fed’s John Williams, Lael Brainard and SEC Chair Gary Gensler speak, Wednesday
- ECB President Christine Lagarde speaks, Wednesday
- Eurozone CPI, Thursday
- US housing starts, initial jobless claims, Thursday
- Fed’s Neel Kashkari, Loretta Mester speak, Thursday
- US Conference Board leading index, existing home sales, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 was little changed as of 10:25 a.m. New York time
- The Nasdaq 100 fell 0.5%
- The Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 rose 0.5%
- The MSCI World index rose 1.8%
Currencies
- The Bloomberg Dollar Spot Index rose 0.4%
- The euro fell 0.2% to $1.0327
- The British pound fell 0.7% to $1.1745
- The Japanese yen fell 1.2% to 140.54 per dollar
Cryptocurrencies
- Bitcoin rose 1% to $16,536.86
- Ether rose 2.4% to $1,245.7
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 3.88%
- Germany’s 10-year yield declined three basis points to 2.13%
- Britain’s 10-year yield declined four basis points to 3.32%
Commodities
- West Texas Intermediate crude fell 0.9% to $88.19 a barrel
- Gold futures rose 0.5% to $1,778 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar, Cecile Gutscher, Brett Miller, Cristin Flanagan and Vildana Hajric.
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