(Bloomberg) — U.S. stocks fell amid concerns about the growth outlook in the United States as the Federal Reserve vowed to get tough on inflation. Investors are also seeking the shelter of the dollar as concerns grow that China may tighten Covid restrictions after a string of reported deaths.
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The S&P 500 was dragged down by the technology and energy sectors. The Nasdaq 100 also fell. Oil fell on concerns of weakening demand from China and on news that Saudi Arabia is considering increasing OPEC + by 500,000 barrels per day.
The dollar rose against its Group of 10 counterparts and emerging market currencies. The treasure rose.
China saw its first Covid-related death in almost six months on Saturday and two more were reported on Sunday. Worsening outbreaks across the country are raising concerns that authorities could resort to stricter restrictions again.
The offshore yuan’s weakness against the dollar on Monday was “the biggest negative macro factor price driver for the S&P 500,” said Charlie McElligott, director of cross-currency strategy at Nomura Securities International.
“This renewed dollar strength also helps tighten USD liquidity and acts as a boon for US Stocks from the S&P 500 to the Nasdaq to the Russell,” he said.
Traders this week will also look to the details of the Federal Reserve’s latest policy meeting for further signs on the rate hike course.
“That November Fed meeting seems like a long time ago, but it could be an opportunity to push back a little bit aggressively in the markets,” Veronica Clark, an economist at Citigroup, said Monday on Bloomberg Television. “For the Fed right now, if we get a little bit of a slowdown in inflation — which it looks like we might — but you don’t see it in a slowdown in core inflation, that’s tied to a tight labor market. It has to be you see that slack in the labor market data.”
Atlanta Fed President Raphael Bostic said he favors slowing the pace of interest rate hikes, with no more than 1 percent increase, to try to ease the economy’s recession. Boston Fed President Susan Collins reiterated her view that options are open for a December interest rate hike, including the possibility of a 75 basis point move.
This week’s main events:
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US Richmond Fed manufacturing index, Tuesday
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The OECD publishes its Economic Outlook on Tuesday
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The Fed’s Loretta Mester and James Bullard speak Tuesday
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S&P Global PMI: US, Eurozone, UK, Wednesday
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US MBA mortgage applications, permanent items, initial unemployment claims, University of Michigan sentiment, new home sales, Wednesday
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Minutes of the Federal Reserve meeting of November 1-2, Wednesday
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The ECB publishes an account of its October policy meeting on Thursday
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US stock and bond markets are closed Thursday for the Thanksgiving holiday
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US stock and bond markets close early, Friday
Some key movements in the markets:
Stocks
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The S&P 500 was down 0.4% as of 10:20 a.m. New York time.
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The Nasdaq 100 fell 0.7%
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The Dow Jones Industrial Average fell 0.1%
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The Stoxx Europe 600 rose 0.1%
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The MSCI World Index increased by 0.6 percent
Currencies
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The Bloomberg Dollar Index rose 0.6%
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The euro fell by 0.7 percent to 1.0254 dollars
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The British pound decreased by 0.7 percent and became 1.1810 dollars
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The Japanese yen fell by 0.9 percent to 141.69 dollars
Cryptocurrencies
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Bitcoin fell 0.8 percent to $16,129.2
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Ether fell 0.8% to $1,131.87
Bonds
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The yield on 10-year Treasuries fell two basis points to 3.81%.
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Germany’s 10-year yield fell two basis points to 1.99%
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UK 10-year yield drops three basis points to 3.20%
Commodities
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West Texas Intermediate crude fell 4.6% to $76.41
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The price of gold decreased by 0.8 percent and became 1754.30 dollars
This story was produced with the help of Bloomberg Automation.
— Assisted by Peyton Forte and Isabelle Lee.
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