Stocks rebound as yields and oil prices fall

  • Gold and Oil Futures Fall as Bitcoin Rises
  • Dollar gains ground in volatile session

NEW YORK, May 10 (Reuters) – Wall Street closed higher on Tuesday as investors awaited inflation data and worried about the outlook for slowing economic growth and the impact of policy tightening.

U.S. Treasuries rallied, with the yield on the benchmark 10-year note dropping from a more than three-year high to below 3% as investors reassessed the outlook for inflation ahead of Wednesday’s data release. US consumer price index (CPI).

U.S. crude oil futures fell below $100 a barrel to their lowest level in two weeks as the demand outlook clouded by coronavirus lockdowns in China and growing recession concerns, while a strong dollar made crude more expensive for buyers using other currencies.

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Markets were volatile across all asset classes amid soaring inflation and fears that monetary tightening aimed at slowing price increases could lead to slower global economic growth.

Last week, central banks in the United States, Britain and Australia raised interest rates and investors braced for further tightening as policymakers battle soaring inflation.

After turning red a few hours earlier in the session, the S&P closed slightly while the Nasdaq gained nearly 1%. Technology, the market’s biggest growth sector, led the gains as investors reacted to falling bond yields and rebounded from a selloff on Monday. Read more

“If we’ve seen the worst of the rate of change in long-term interest rates, that could allow equities to do a bit better,” said Sameer Samana, senior global markets strategist at Wells Fargo Investment Institute in St. Louis.

The Dow Jones Industrial Average (.DJI) fell 84.96 points, or 0.26%, to 32,160.74, the S&P 500 (.SPX) gained 9.81 points, or 0.25%, to 4,001.05 and the Nasdaq Composite (.IXIC) added 114.42 points, or 0.98%, to 11,737.67.

The MSCI Global Stock Gauge (.MIWD00000PUS) gained 0.08%.

Matthew Miskin, co-head of investment strategy at John Hancock Investment Management, was reassured by policymakers, including Cleveland Federal Reserve Bank President Loretta Mester. While Mester said unemployment could rise and growth could slow, she added that the tightening should not cause a “sustained slowdown”. Read more

“They’ve been so hawkish that the market wants to sniff it out at any little move,” Miskin said. “When it comes to feelings, a lot of people are looking for surrender. The dots aren’t fully connected for that yet.”

The U.S. dollar was choppy on Tuesday but held near a two-decade high ahead of much-anticipated inflation data that could provide some insight into the Fed’s policy trajectory. Read more

The dollar index, which measures the greenback against a basket of other major currencies, last rose 0.193% as the euro fell 0.24% to $1.053.

“It’s quiet ahead of inflation data tomorrow, so that allows for a break for risky assets,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, D.C. with trader positioning that “worked in favor of risky assets”. “

The Japanese yen weakened 0.10% against the greenback at 130.40 to the dollar, while the pound last traded at $1.2314, down 0.14% on the day.

Oil prices fell in volatile trade as the market balanced looming European Union sanctions on Russian oil with demand concerns over China’s coronavirus lockdowns, a strong dollar and growing recession risks .

U.S. crude recently fell 3.35% to $99.64 a barrel and Brent to $102.26, down 3.47% on the day.

Earlier data showed China’s export growth slowed to its weakest level in nearly two years as the central bank pledged to step up support for a slowing economy. Read more

Benchmark 10-year notes were last up 22/32 to 2.9947%, down from 3.079% on Monday night.

“It’s a recalibration of risk. There’s no other catalyst except that it’s gone too far, too fast,” said George Goncalves, head of US macro strategy. at MUFG Securities, referring to yields. “Maybe we’re going to have a period of inflation that doesn’t just go up unabated.”

Spot gold fell 1.0% to $1,835.86 an ounce as investors watched the dollar rise and await Wednesday’s inflation data.

Elsewhere, bitcoin rose 3.7% after falling to its lowest level since July 2021. Tuesday’s gain recouped some losses from its 11.8% plunge on Monday. Read more

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Reporting by Sinéad Carew; Additional reporting by Herbert Lash and Chuck Mikolajczak in New York, Elizabeth Howcroft in London; Editing by Alexander Smith, Nick Macfie and Lisa Shumaker

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