Tech Behemoths Drag on Stocks as Bonds Sell Off: Markets Wrap

(Bloomberg) -- Tech heavyweights dragged on US benchmarks with stocks poised to extend a slump into a third day, a global bond market selloff intensified. The S&P 500 erased early gains, the equities gauge has closed below a closely-watched technical level twice this week. The Nasdaq 100 fell 0.5% with Apple Inc. and Tesla Inc. weighing on the large-cap growth index. While many investors had believed that the Federal Reserve was done raising interest rates, that’s no longer a sure thing after minutes from last meeting suggested officials are considering tighter policy. Data showing the labor market remains healthy did little to change the narrative Thursday. Investors will be turning to next week’s gathering of policy makers at Jackson Hole in Wyoming to gauge Fed sentiment. “This week’s data hasn’t given them any reason to let their guard down,” said Mike Loewengart at Morgan Stanley Global Investment Office. “With housing starts, retail sales, and jobless claims all reinforcing the picture of a robust economy, another rate hike can’t be ruled out, even if the Fed remains on hold next month.” The moves across bond markets have been sharp and swift this week. The 10-year Treasury yield rose as much as 7 basis points to 4.32% on Thursday, approaching the highest level since 2007. “Our baseline is the Fed will not likely alter rates at the next meeting but the following meeting decision is yet to be determined,” Jeffrey Roach, chief economist at LPL Financial, wrote. “Treasury yields are hitting new highs as investors reset expectations about long-term inflation.” Read More: Global Yields March to 15-Year Highs as Rate-Hike Worries Build Treasuries have been a key driver of the global debt selloff as resilience of the world’s largest economy defies expectations that a run of Federal Reserve interest-rate hikes would spark a recession. In the UK, the surge in gilt yields comes after sticky inflation and strong wage data boosted investor bets that the Bank of England will need to raise interest rates further to 6% and keep them high for longer. Japan’s 20-year bond yield surged after a debt auction drew tepid investor demand. China also continued to weigh on sentiment. The picture emerging from property agents and private data providers suggest the slump in the real estate market may be worse than official reports show. China ramped up its efforts to stem losses in its currency on Thursday by offering the most forceful guidance since October through its daily reference rate for the managed currency. Authorities told state-owned banks to step up intervention in the currency market this week, in a push to prevent a surge in yuan volatility, according to people familiar with the matter. The dollar took a breather from its five-day climb while the pound continued to outperform. Elsewhere, crude halted a three-day drop while gold edged up after closing below $1,900 an ounce for the first time since March. Key events this week Eurozone CPI, Friday Some of the main moves in markets: Stocks The S&P 500 was little changed as of 11:56 a.m. New York time The Nasdaq 100 fell 0.2% The Dow Jones Industrial Average fell 0.1% The Stoxx Europe 600 fell 0.9% The MSCI World index fell 0.3% Currencies The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.0875 The British pound rose 0.1% to $1.2749 The Japanese yen rose 0.1% to 146.16 per dollar Cryptocurrencies Bitcoin fell 3.4% to $27,957.69 Ether fell 3.8% to $1,740.04 Bonds The yield on 10-year Treasuries advanced six basis points to 4.31% Germany’s 10-year yield advanced six basis points to 2.71% Britain’s 10-year yield advanced 10 basis points to 4.75% Commodities West Texas Intermediate crude rose 1.5% to $80.61 a barrel Gold futures fell 0.3% to $1,922.40 an ounce This story was produced with the assistance of Bloomberg Automation. --With assistance from Alex Nicholson, Richard Henderson, Alice Gledhill and Farah Elbahrawy. ©2023 Bloomberg L.P.

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