Updated at 9:49 a.m. EST
US stocks fell again on Thursday as Treasury bond yields jumped amid bets on aggressive Fed rate hikes as investors kicked off the market’s toughest month in a pessimistic mood. fueled by rising tensions between Washington and Beijing.
Weaker growth in Asia, where PMI data on Thursday points to a slowdown in the region’s three major economies, alongside the Russia-linked energy crisis in Europe and record inflation, has caused investors to lose confidence in the approach of early September, which is traditionally the month that offers the least in terms of historical returns for US investors.
Another concern was added to the September list by a decision by the US government to ban the sale of semiconductor components crucial to China in the latest escalation of tensions between Washington and Beijing.
Nvidia (NVDA) said in a filing with the Securities and Exchange Commission late Wednesday that the government had imposed new restrictions on the sale of its upcoming A100 and H100 chips, which are also incorporated into other Nvidia-designed products.
Equities are also facing headwinds from the Fed’s inflation fight, with bets on a third consecutive 75 basis point rate hike to 72% in overnight trading, pulling stocks higher. Benchmark 2-year Treasury yields north of 3.5% for the first time since 2007. Benchmark 10-year bonds, meanwhile, jumped 4 basis points to 3.247%.
Those bets were cemented by overnight comments from Cleveland Fed Chair Loretta Mester, who said at an event in Dayton, Ohio that the fed funds rate would rise “somewhat above the 4% level, adding that it was “wishful thinking” to assume that inflation had peaked.
Thursday’s jobs data provided more evidence of rising inflation, with weekly jobless claims falling to 232,000, with third-quarter unit labor costs rising 10.2%, even as productivity contracts by -7.4%
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Growth concerns remain, however, and oil prices extended an overnight trade decline amid reports of further Covid shutdowns in China that will accelerate a fall in demand from the world’s biggest energy importer.
WTI futures for October delivery fell $0.01 overnight to trade at $88.54 a barrel while Brent contacts for the same month, the global price benchmark, jumped $0.01. $1.20 to trade at $94.44 a barrel.
Overnight in Asia, hopes of another round of stimulus from Beijing helped Chinese stocks to a modest gain on Thursday, although weakness in the region pulled the MSCI ex-Japan index down 1.85. % during the session.
In Europe, stocks fell 1.5% in mid-afternoon Frankfurt as expectations of a 75 basis point rate hike from the European Central Bank, which meets Sept. 8 in Frankfurt, are now fully integrated into regional interest rate markets.
On Wall Street, the S&P 500, which fell 4.24% last month, was down 27 points at the opening of trade while the Dow Jones Industrial Average fell 131 points. The tech-focused Nasdaq lost 95 points.
In terms of individual stocks, Nvidia shares fell 4.1% after the US government ordered the chipmaker to stop exporting artificial intelligence components to customers in China.
You’re here (TSLA) Shares fell 1% on data from China indicating a solid improvement in sales and exports in August, as production at its key Shanghai factory ramped up after its summer lull.
waltz disney (SAY) Shares edged higher following a Wall Street Journal report that the media and entertainment group is planning an “Amazon-like” membership program.
Apple (AAPL) Shares fell 0.4% after an analyst report from International Data Corporation predicted weaker-than-expected global smartphone shipments by the end of the year.
