Investors are increasingly concerned that the US Federal Reserve, the US central bank, will raise interest rates sooner than they expect.
US stocks fell on Friday after the Federal Reserve Chairman signaled some concern over inflation.
The S&P 500 slipped 0.1% and the Nasdaq 100 fell 0.8% as Jerome Powell said the central bank was carefully monitoring price pressures and would adjust accordingly.
The constraints and shortages in the global supply chain that have led to high inflation “must go on longer than expected, possibly until next year,” Powell said, while adding that “it still is. the most probable case âonly as these constraints diminish. .
Investors are increasingly concerned that increased cost pressures and bottlenecks in the global supply chain will push the Fed to raise interest rates faster than expected. However, a strong start to the earnings season had offset those fears, with the benchmark S&P 500 hitting a record high on Thursday.
“The market is increasingly worried that we are in some kind of higher inflation over the longer term,” Jim Bianco, president and founder of Bianco Research, said on Bloomberg TV and Radio’s “Surveillance.” Stocks won’t like it if the Fed responds to inflation and bonds won’t like it if they don’t, he said. “It’s not a good scenario.”
The 10-year US Treasury yield fell to 1.65% but was still higher for the week. The dollar fell slightly, on track for a second week of decline. And the gold won.
The losses came after the S&P 500 struggled for direction earlier in the session after disappointing overnight tech earnings. A warning on Snap Inc.’s ad spend wiped out more than $ 100 billion in market value for the social media company and its peers, including Facebook Inc., Alphabet Inc., owner of Google, Pinterest Inc. and Twitter Inc. Meanwhile, Intel Corp. also fell on lower than expected sales due to component shortages.
“A double whammy of bad news for the tech industry may well mean record highs are out of reach for now,” Fiona Cincotta, senior financial markets analyst at City Index, wrote in a note.
Despite the threat of price pressures, however, global stocks are expected to experience a third weekly gain, aided by the ongoing recovery from the health crisis. Stocks in Europe gained on Friday, led by consumer stocks on positive earnings. Stocks in Asia also rose after China Evergrande Group pulled back from the brink of default, easing concerns of a contagion in the developer’s woes.
Crude oil gained, Bitcoin fell to $ 60,600 and the Russian ruble surged after the country’s central bank raised borrowing costs more than economists expected.
Some of the main movements in the markets:
- The S&P 500 fell 0.1% at 4 p.m. New York time
- The Nasdaq 100 fell 0.9%
- The Dow Jones Industrial Average rose 0.2%
- The MSCI World Index has changed little
- Bloomberg Dollar Spot index fell 0.2%
- The euro rose 0.2% to $ 1.1644
- The British pound lost 0.2% to $ 1.3762
- The Japanese yen rose 0.5% to 113.43 per dollar
- The yield on 10-year treasury bills fell five basis points to 1.64%
- The German 10-year yield was little changed at -0.11%
- UK 10-year yield fell six basis points to 1.15%
West Texas Intermediate crude rose 1.9% to $ 84.07 a barrel
Gold futures rose 0.7% to $ 1,795 an ounce