Stock Market Today: Stocks mixed as bond yields soar on price bets

Stock Market Today: Stocks mixed as bond yields soar on price bets

Updated at 9:06AM EST

US stock futures traded mixed on Thursday, while the dollar fell against its global peers, as investors continue to closely track interest rate markets as next week’s Federal Reserve meeting approaches.

Markets also got a modest boost before entering the market, after the White House brokered an agreement with union representatives and rail workers to prevent a disruptive strike scheduled to begin later this week.

The Biden administration was facing a Friday midnight deadline to broker a deal between rail operators and unions that represent about 60,000 members amid a long-running dispute over working conditions, wages and employee safety.

Stocks remain deeply in the red when compared to Monday’s closing levels, however, after the biggest sell-off in two years on Tuesday, driven by a faster-than-expected reading of August inflation and a corresponding rise in Fed rate hike expectations.

The odds of an unprecedented move of 100 basis points, which would be the largest since 1984, are flat at around 26%, based on data reflected in CME Group’s FedWatch, with bets on subsequent hikes likely to push the fed funds rate to between 4.25% and 4.5% by the end of February.

The demand component of rising inflation was also in focus on Thursday with the release of retail sales data for August at 8:30 AM ET.

The Commerce Department said August retail sales rose 0.3% to $683.3 billion, ahead of street expectations for a 0.1% decline. Excluding the auto sector, retail sales fell 0.3%, the report indicated, while standalone gasoline sales fell 4.2% with prices retreating from a record high of $5,017 a gallon during June.

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With sales up 9.1% from a year ago, showing gains on a volume basis, however, investors will find comfort in the fact that consumers are using the money saved from lower pump prices to spend in various sectors of the economy.

Meanwhile, bond markets continue to issue stagnation warnings about a recession, with the spread between two-year bond yields โ€” which have been trading at the highest levels since 2007 โ€” now about 38 basis points higher than the yield on 10-year bonds. .

Meanwhile, the dollar index was down 0.2% in early New York trading at 109.444, while the euro rose above parity to 1.0010.

Currency and bond market moves have set a backdrop in which stocks are struggling to find traction in the market as only good economic news increases the chances of prices rising deeper, while inflation data itself is not slowing down fast enough to allow bets to pause in the Fed’s tightening cycle.

European shares, however, posted a 0.08% gain in midday Frankfurt trading, following a 0.2% rise for Tokyo’s Nikkei 225 and the ex-MSCI Japan slump 0.16% regionally.

On Wall Street, futures linked to the S&P 500 are priced at a modest 3 point lower than the opening bell, while contracts linked to the Dow Jones Industrial Average are priced up 22 points. Technology-focused Nasdaq-related futures indicate a 4 point move to the downside.

Railroad shares soared strongly after Biden’s deal with union members, with CSX Corp (CSX) Union Pacific shares rose 3.8%. (UNP) Shares jumped 4% to $226.50 each. Southern Norfolk (National Security Council) 1.5% profit.

Walt Disney (dis) Shares rose 0.25% after an upbeat speech from CEO Bob Chuckle at a technology and media sector conference late Wednesday in San Francisco.

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Elsewhere, a historic โ€œmergerโ€ of two blockchain networks, one of which supports the worldโ€™s second largest cryptocurrency, was completed last night, potentially challenging Bitcoinโ€™s dominance in the digital token market.

The Ether token was last seen 3% lower in the session and the coins traded at $1,590.92 each.

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