US stocks were down at noon Monday, with tech stocks under pressure, after the worst week for all three major stock indexes in nearly three months amid fears of rising inflation.
How is stock market benchmarking trading carried out?
The Dow Jones Industrial Average DJIA,
traded 133 points lower to around 34,245, a decline of 0.4%.
The S&P 500 SPX index,
was 20 points, or 0.5%, to about 4,153.
The Nasdaq COMP composite index,
traded 121 points lower to 13,308, a decline of 0.9%.
On Friday, the Dow, S&P 500 and Nasdaq Composite Index all posted their biggest weekly losses since February 26, with the Nasdaq also recording their longest weekly losing streak, four in a row, since August 23, 2019.
What drives the market?
Inflation fears continue to weigh on the market and investors were awaiting the release on Wednesday of the minutes of the last Federal Reserve meeting to help assess the central bank’s tolerance to price pressures in the recovery phase. the COVID pandemic.
“We will continue to focus on inflation for the foreseeable future, because it is important: expectations of inflation and inflation have an impact on consumer behavior, and they have an impact on monetary policy. In the current environment, inflation can also have an impact on fiscal policy, ”Katie Nixon, CIO of Northern Trust Wealth Management, wrote in a research report released Monday.
A number of Fed members, so far, have described these pressures as likely transient, even after last Wednesday’s reading of consumer inflation hit its highest rate since 2008.
Lily: ‘Stuck and distorted’: investors grapple with inflation that could strain Fed framework
“Traders are going to focus on this week’s biggest event: the Fed minutes, and they’ll love to know what the Federal Reserve thinks about recent US CPI data,” wrote Naeem Aslam, analyst at chief market at AvaTrade, in a daily note.
“Remember, the Fed has shown no concerns about the spike in inflation yet because it believes the current surge is only temporary,” the analyst wrote.
Meanwhile, data from the world’s second-largest economy has shown evidence of China’s slow pace of recovery from COVID.
Retail sales rose 17.7% from the level reached by the pandemic a year earlier, below the pace of 34.2% in March. On top of that, April’s industrial production rose 9.8% from a year earlier, slower than March’s 14.1% pace, the Wall Street Journal reported, citing the National Office. statistics. Investments in fixed assets rose 19.9% over the January-April period, compared to 25.6% in the first quarter.
The readings come after similar reports on US retail sales for April were flat and a report on US manufacturing production rose 0.7% in April, weaker than economists’ forecasts.
Domestically, equity markets have been buoyed by an improving outlook for the U.S. economy and corporate earnings, with strategists upping 2021 profit estimates at the fastest pace since the U.S. tax cut plan. Donald Trump for 2018 has led to a reassessment of the outlook for corporate earnings, Bloomberg News reports. .
The S&P 500’s earnings per share rose 5.7% to $ 183.90 from $ 174, according to Bloomberg.
The increase highlights a difficult situation where the economy is rosier, but nervousness around inflation threatens to shake up investment markets in the short term.
“Investors are afraid [to] to engage, which is why we are missing the confidence of a few weeks ago in the market, especially in the technology sector, ”wrote JJ Kinahan, chief market strategist at TD Ameritrade.
“There are so many question marks at this point that we are really at a crossroads in terms of inflation, rates and ‘back to work’,” he wrote.
Monday’s trading was also influenced by reports that AT&T is in advanced talks to merge WarnerMedia, which includes HBO, with Discovery, according to sources.
Atlanta Fed Chairman Raphael Bostic said in an interview with CNBC on Monday that he supported the pursuit of easy monetary policy and that it would take him “a few months” to understand the dynamics of the ongoing inflation as the economy recovered from the pandemic.
Fed Vice Chairman Richard Clarida said it was too early to cut back on Fed asset purchases and that he expected the rise in inflation to be temporary, but that ‘He is also keeping a close watch on economic data, while speaking at the Atlanta Fed’s financial markets conference.
Which companies are targeted?
Actions of AT&T Inc.
were up 0.6% after the deal was announced, while those of Discovery Inc.
was down 4%.
AMC Entertainment Holdings
rallied 7.1%, putting them on track to extend their winning streak to seven sessions.
- Redbox on Monday announced plans to go public through a merger with a special-purpose acquisition company, in a deal valuing the home entertainment and film company at $ 693 million. Redbox is owned by Apollo Global Management Inc., which it acquired when purchasing Outerwall in September 2016.
Actions of Nuvve Holding Corp.
climbed 35% on Monday, after the commercial vehicle technology company at the Network and Stonepeak Partners LP announced plans to form a new joint venture called Levo Mobility LLC to roll out electric vehicle charging for school buses and other fleets of commercial electric vehicles.
United Airlines Holdings Inc. UAL,
said on Monday it was adding more than 400 daily flights to its July schedule and would increase its service to destinations in Europe, with bookings for summer travel more than tripling (up 214%) from levels from 2020. Shares rose 1.4%.
Pizza Hut and Beyond Meat Inc. BYND,
said on Monday that the plant-based meat alternative would come to Pizza Hut menus in Edmonton and the Greater Toronto Area. Pizza Hut is part of the Yum Brands Inc.
wallet. Beyond shares were down 4%, while Yum’s were down 0.8%.
- Hexo Corp. HEXO announced Monday that it has agreed to acquire 48North Cannabis Corp. NCNNF in an all-equity transaction valued at approximately C $ 50 million ($ 41.3 million).
- Curaleaf Holdings Inc. CURLF CURA said Monday it has reached a deal to acquire Los Sueños Farms, Colorado’s largest outdoor cannabis crop, for $ 67 million in cash, stock and assumed debt.
How are the other assets doing?
The yield on the 10-year TMUBMUSD10Y T-bill increased by around 1 basis point to 1.64%. Bond yields and prices move in opposite directions.
The ICE US Dollar DXY Index, a measure of the US currency against a basket of six major rivals, rose 0.1% to around 90.21.
West Texas Intermediate crude for June CL.1 delivery, 0.89%, edged up 82 cents, or 0.2%, to $ 66.21 a barrel on the New York Mercantile Exchange. June GCM21 gold rose $ 28.10, or 1.5%, to $ 1,866 an ounce on Comex.
European stocks fell, with the Stoxx 600 SXXP ending below 0.1% and London’s FTSE 100 UKX falling 0.2%.
In Asia, the Hang Seng HSI index in Hong Kong rose 0.6%, the Shanghai Composite SHCOMP by 0.8%. However, a rise in COVID cases led to a decline in Japan, with its Nikkei 225 NIK closing at 0.9% and Taiwan’s TAIEX Y9999 closing at 3%.