(Bloomberg) — US stocks wavered on Thursday as traders parsed various corporate earnings against a backdrop of aggressive interest-rate hikes by global central banks. The US yield curve remained inverted as recession fears persisted.
The S&P 500 ended the session little changed after fluctuating throughout the day. The Nasdaq 100 closed up higher for the second straight day after swinging between modest gains and losses.
While the tech-heavy index was buoyed by Amazon.com Inc. and Advanced Micro Devices Inc. later in the session, it was also dragged down by Fortinet Inc. after the firm trimmed its service-revenue forecast. Eli Lilly & Co., which dropped after missing Wall Street expectations for second-quarter revenue, weighed on the S&P 500 Index. Thin liquidity in the summer also tends to amplify market moves.
Treasury yields wobbled throughout the session, with the 10-year rate around 2.66% after pushing past 2.80% on Wednesday.
A flurry of economic data that released this week assuaged fears of a downturn while hinting at stabilizing growth. But the bond market, especially the persistently inverted Treasury yield curve, is flashing warnings on the economy amid a global wave of monetary tightening. All eyes will be on the US jobs report on Friday for further clues about the Federal Reserve’s path of rate hikes.
“There’s an intense tug-of-war happening in the economy and markets,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “On one side, you have a narrative that reasonable growth is going to support continued inflation pressure and keep the Fed hiking. The other narrative is that slowing growth is going to ease inflation and allow the Fed to stop hiking.”
On Thursday, Cleveland Fed President Loretta Mester reiterated the central bank’s promise to bring down inflation by raising interest rates. Her counterparts, this week, have also been backing this hawkish stance, forcing markets to recalibrate after initially expecting a dovish pivot Fed Chair Jerome Powell hinted at last week.
Read More: Bet Bucking Herd on Fed Pays $12.6 Million Windfall in a Week
US-China tension also remains among the uncertainties clouding the outlook. China likely fired missiles over Taiwan during military drills on Thursday, Japan said, part of Beijing’s biggest cross-strait exercises in decades after US House Speaker Nancy Pelosi visited the self-ruled island.
Read More: China Stokes Tensions as Missiles Reportedly Overfly Taiwan
West Texas Intermediate stayed below $90 a barrel, a level last seen in the weeks leading up to Russia’s invasion of Ukraine. Gold advanced and Bitcoin fell.
Read More: US Recession Odds Are Falling Fast, JPMorgan Trading Model Shows
Earnings continued to trickle in after markets closed. Lyft Inc. reporting record earnings as the firm saw a “material improvement” in driver shortage while Zillow Group Inc. provided a third-quarter outlook below what analysts were expecting.
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What to watch this week:
- US employment report for July, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 was little changed as of 4 p.m. New York time
- The Nasdaq 100 rose 0.4%
- The Dow Jones Industrial Average fell 0.3%
- The MSCI World index rose 0.9%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.8% to $1.0246
- The British pound rose 0.2% to $1.2170
- The Japanese yen rose 0.7% to 132.88 per dollar
Bonds
- The yield on 10-year Treasuries declined five basis points to 2.66%
- Germany’s 10-year yield declined seven basis points to 0.80%
- Britain’s 10-year yield declined two basis points to 1.89%
Commodities
- West Texas Intermediate crude fell 2.6% to $88.33 a barrel
- Gold futures rose 1.9% to $1,810.30 an ounce
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