(Bloomberg) — Stocks posted mild gains in a volatile trading session, while the Treasury curve inversion deepened to levels last seen in 2007. Oil tumbled below $100 a barrel.
The S&P 500 erased losses, while the Dow Jones Industrial Average outperformed as Boeing Co. announced a jump in deliveries. The yield on the 10-year US note dropped as much as 12 basis points below the two-year rate, eclipsing the gap reached in early April. So-called inversions of the curve are regarded as a potential harbinger of an economic contraction.
Traders also kept a close eye on the dollar, which had a small decline after hitting the highest since the Covid-19 panic of March 2020. For now, a wall of derivatives bets is keeping the euro from reaching parity with the greenback for the first time in two decades.
For Peter Boockvar at Bleakley Financial Group, investors will be very much focused on the currency moves and their impact on corporate profits. PepsiCo Inc., one of the first major industry players to report second-quarter earnings, said demand remained robust despite inflation — though it expected dollar headwinds.
“As recession odds in the U.S. and abroad have grown and cooling demand is now a top-of-mind concern for investors, what companies have to say about their business outlooks over the coming weeks should take on an added degree of significance,” said Anthony Saglimbene, global market strategist at Ameriprise.
In other corporate news, Peloton Interactive Inc. rallied on plans to cease in-house manufacturing to cut costs. American Airlines Group Inc. surged after sticking with its expectation for a jump in second-quarter sales. Bargain hunters are expected to find Amazon.com Inc.’s two-day Prime Day sale underwhelming, with many sellers minimizing profit-eating discounts in an era of soaring costs.
Economists say inflation continued to heat up in June, hitting a pandemic peak that will keep the Fed geared for another big rate hike later this month. The consumer price index due Wednesday probably rose 8.8% from a year earlier, marking the largest jump since 1981, according to the median forecast in a Bloomberg survey.
Sam Zell, the billionaire made famous by his real-estate deals, said that central bank actions to flood the market with money in recent years are coming back to bite the economy. He urged Fed Chair Jerome Powell to raise rates by as much as 75 basis points and “break the inflation mentality.”
Elsewhere, Bitcoin fell back below $20,000, following last week’s rally.
What to watch this week:
- Earnings due from JPMorgan, Morgan Stanley, Citigroup, Wells Fargo
- New Zealand rate decision, Wednesday
- US CPI data, Wednesday
- Federal Reserve Beige Book, Wednesday
- US PPI, jobless claims, Thursday
- China GDP, Friday
- US business inventories, industrial production, University of Michigan consumer sentiment, Empire manufacturing, retail sales, Friday
- G-20 finance ministers, central bankers meet in Bali, from Friday
- Atlanta Fed President Raphael Bostic speaks, Friday
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Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.2% as of 12:45 p.m. New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average rose 0.5%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.0064
- The British pound rose 0.1% to $1.1909
- The Japanese yen rose 0.5% to 136.70 per dollar
Bonds
- The yield on 10-year Treasuries declined six basis points to 2.93%
- Germany’s 10-year yield declined 11 basis points to 1.13%
- Britain’s 10-year yield declined 10 basis points to 2.07%
Commodities
- West Texas Intermediate crude fell 7.7% to $96.10 a barrel
- Gold futures fell 0.2% to $1,728.30 an ounce
More stories like this are available on bloomberg.com
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