US stocks traded lower on Wednesday morning, but fell mostly to earlier lows, after economic reports indicated a healthy economy in both the consumer and manufacturing sectors, but suggested also that inflation could shake faster than investors expected, rising bond yields.
How do stock benchmarks work?
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Dow Jones Industrial Average DJIA,
-0.19%
was 60 points lower, close to 31,463, a decrease of 0.2%. -
S&P 500 SPX Index,
-0.54%
slipped 23 points to reach 3,910, down 0.6%. -
Nasdaq Composite,
-1.21%
fell 182 points, or 1.3%, to trade close to 13,874.
On Tuesday, the Dow ended with a record, but the S&P 500 and Nasdaq Composite indices pulled off a two-day series of gains to end below.
What drives the market?
US retail sales figures for January provided the latest reading on the health of the consumer amid the coronavirus pandemic, crushing sales estimates and a 5.3% increase for that month, after a 1% drop in December on as COVID cases increased. But US producer prices rose 1.7% in the last year from 0.8% in the previous month.
A separate report on industrial production in the Federal Reserve showed an increase of 0.9% in January, also reducing economists’ forecasts of an increase of 0.5%. Companies replenished their stocks longer than expected in December, but a reading of homebuilders’ confidence was stronger than expected.
However, the producer price index rose by 1.3% in January, the largest increase since the index underwent a major revision in 2009 and service prices were included in the report. The wholesale inflation rate in the last 12 months rose to 1.7% from 0.8% at the end of 2020 – not far from the pre-pandemic level of 2%.
The data helps boost US bond yields as investors also look forward to the prospect of greater fiscal stimulus from Congress and declining coronavirus cases. Tuesday, note 10-Treasury TMUBMUSD10Y,
reached a yield of almost 1.30%, the highest level since February 26, according to Dow Jones Market data.
“The number of retail sales was amazing and the PPI was very strong, but we had a number of months ago,” said Peter Andersen, founder of Andersen Capital Management in Boston. “It is too difficult to extrapolate based on a month. It may show an accumulated demand, but the dynamics of the supply demand is still too difficult to filter. I think it might show what the recharged application is once we go through the vaccine launch. We’re going racing. ”
In an interview with MarketWatch, Andersen called himself “really shocked by the attention investors pay to shiny items like Bitcoin, space exploration, SPACs.” The market could use a little direction from more news about the vaccine’s progress, he said, but overall, apart from a few foamy areas, it’s not worrisome.
“Markets are showing low losses today as slight concerns about rising government bond yields have encouraged some traders to reduce their equity exposure,” said David Madden, market analyst at CMC Markets UK.
“Recently, the mood in global stock markets has been very volatile as there have been multi-year highs and, in some cases, historical highs,” Madden wrote. “The purchase was fueled by hopes of higher stimulus spending by the Biden government, also in the view that the successful launch of vaccines should help reopen economies and, in turn, economic activity will increase by the end of this year. “Referring to President Joe Biden’s $ 1.9 trillion proposal for COVID assistance.
Meanwhile, icy weather is causing trouble in much of the United States, including Texas, leaving millions of people without electricity and nearly 75 percent of the lower 48 states covered in snow, The Wall Street Journal wrote, quoting National Snow daily. Analysis of National Oceanic and Atmospheric Administration. report. Freezing weather reduced US oil production and helped drive up prices.
In other economic reports, investors will watch the minutes of the January Federal Reserve political meeting be released at 2 p.m. vaccines.
Among today’s Fed speakers, Richmond Federal Reserve Bank President Thomas Barkin was due to speak at 9 a.m., said Boston Boston Fed President Eric Rosengren will speak an hour later and Dallas Dallas Fed President Robert Kaplan will speak later on Wednesday after 6 p.m.
See: The big flight into the city has led to rising suburban housing prices – Will the pandemic survive?
What stocks are concentrated?
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Actions of Verizon Communications Inc. VZ increased by 3.7% and Chevron Corp. CVX rallied 3.2% to keep pace with the Dow after Warren Buffett’s Berkshire Hathaway Inc. of BRK.B revealed that it had acquired high stakes in companies in the fourth quarter.
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Canadian cannabis company Sundial Growers Inc. SNDL has filed a registration with the Securities and Exchange Commission to issue up to $ 1 billion in securities over time. Shares fell by more than 15% in early transactions.
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Manufacturer of medical devices Medtronic PLC MDT said on Wednesday that it is voluntarily recalling the unused Valiant Navion chest stent graft system and informing doctors to immediately stop using the device until further notice. Shares fell 1.4%.
- Energy transfer LP ET announced a purchase agreement on Wednesday Activate Midstream Partners LP ENBL in a share transaction valued at $ 7.2 billion.
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Actions of Hilton Worldwide Holdings Inc. HLT fell 1.1% on Wednesday after the hotel operator reported a surprising loss in the fourth quarter and revenues that fell more than forecast, as rising COVID-19 cases and tightening travel restrictions disrupted the positive momentum seen in the summer. and autumn.
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Shopify Inc.
STORE,
-7.46%
shares fell 5.7%, despite better-than-expected quarterly results.
What do other assets do?
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Yield on the 10-year treasury note TMUBMUSD10Y,
1.285%
decreased by almost 3 basis points to 1.289%. Bond yields and prices are moving in opposite directions. -
The ICE US Dollar DXY index, a measure of the currency against a basket of six major rivals, rose 0.5%.
-
Oil futures rose further as power outages continued across the country, with US reference CL.1,
+ 0.43%
increases 0.2% to $ 60.20 a barrel, exceeding the key level of $ 60. Gold futures GC00,
-1.41%
fell 1.2% to about $ 1,778.20 as bond yields rose. -
The pan-European Stoxx 600 SXXP index fell 0.4% and the London FTSE 100 UKX stock index fell 0.2%.
-
Markets in Hong Kong HSI,
+ 1.10%
closed 1.1% higher, while the Japanese Nikkei 225 NIK fell 0.6%.
Read more: Why the “worst case” scenario of the stock market depends on these 3 ingredients