U.S. Stocks Slip to Start the Week
18 May 2021 - 12:02AM
Dow Jones News
By Joe Wallace
U.S. stocks edged down Monday, signaling muted losses for major
indexes at the opening bell following a week in which concerns
about inflation whipsawed markets.
The S&P 500 ticked down 0.2%. The broad market gauge
retreated over 1.3% last week. The Dow Jones Industrial Average
also slid 0.6% Monday, while the technology-concentrated Nasdaq
Composite Index fell 0.6%.
With earnings season drawing to a close, investors remain
focused on whether a recent jump in inflation will blow over or
become entrenched. A protracted spell of faster growth in consumer
prices could prompt the Federal Reserve to tighten monetary policy,
potentially hurting stocks and other assets that have gained from
low interest rates.
Those concerns last week led the S&P 500 to post its biggest
decline since late February, even after staging a rebound on
Friday. Highflying tech stocks have been particularly vulnerable to
worries about inflation: The Nasdaq Composite has fallen for four
straight weeks, its longest losing streak since August 2019.
"We see this as transitory, but you never know: there is stuff
in here that could take a bit longer," said Lars Skovgaard
Andersen, investment strategist at Danske Bank Wealth Management.
"There will be some volatility in markets still."
Ahead of the opening bell, Discovery's Class-A shares jumped
over 10%. The television company said it would combine its media
assets with those of AT&T into a new publicly traded company.
AT&T, which would receive $43 billion, rose over 5%.
ViacomCBS rose more than 2% in premarket trading. The media
company said late Friday it will reclaim Les Moonves's $120 million
severance package, resolving a more than two-year dispute with the
former chief executive over his termination.
In the bond market, the yield on 10-year Treasury notes ticked
down to 1.633%, from 1.639% Friday. Yields fall when bond prices
rise.
Quickening inflation has sharpened focus on statements by Fed
officials, who have made the case that the pickup will fade,
allowing the central bank to keep supporting the economy. Vice
Chair Richard Clarida is due to speak at the Federal Reserve Bank
of Atlanta Financial Markets Conference at 10:05 a.m. ET.
Bitcoin dropped over 9% to $44,911.55 after a tweet by Tesla
Chief Executive Elon Musk prompted speculation that the
electric-vehicle maker had sold, or would sell, its holdings of the
cryptocurrency. Mr. Musk later tweeted that Tesla hadn't sold any
bitcoin. Tesla shares fell about 2% premarket.
Gold futures rose 0.5% to $1,847.30 a troy ounce, their highest
level since the start of February. Money has started to flow back
into the SPDR Gold Trust, the biggest gold-backed exchange-traded
fund, this month.
In overseas markets, the Stoxx Europe 600 ticked down 0.2%.
Chinese stocks rose after data showed the nation's industrial
output jumped 9.8% year-over-year in April, beating forecasts,
while retail sales rose by a lower-than-expected 17.7%. The
Shanghai Composite Index advanced 0.8%.
The mixed figures suggested China would stick to accommodative
monetary and fiscal policy for now, said David Chao, global market
strategist for Asia Pacific ex-Japan at Invesco. "It is read as a
positive catalyst," he said.
In Taiwan, the benchmark Taiex fell a further 3%, building on a
pullback of more than 8% last week. Over the weekend, authorities
implemented more restrictive measures to combat Covid-19 amid a
spike in new local infections, and on Monday Taiwan reported a
record high of 333 new local cases.
The recent Taiwanese selloff was partly a knee-jerk reaction to
tighter social distancing measures, said Mr. Chao at Invesco. In
addition, he said it reflected an unwinding of margin trading by
individual investors using borrowed money, and a broader rotation
from fast-growing technology stocks to so-called value stocks with
more modest valuations.
Japan's Nikkei 225 lost 0.9% by the close.
Chong Koh Ping in Singapore contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
May 17, 2021 09:47 ET (13:47 GMT)
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