Stocks rebounded on speculation that inflation pressures — largely fueled by a jump in energy costs — will be transitory and won’t derail the economic rebound. Oil rallied.
The S&P 500 erased losses, led by commodity and financial shares. West Texas Intermediate crude climbed to a seven-year high and China’s coal futures hit a record. Aluminum jumped to the highest since July 2008 as a deepening power crisis is squeezing supplies of the energy-intensive metal that’s used in everything from beer cans to iPhones. The cash Treasury market is closed for a holiday. The dollar fluctuated.
Jitters over surging prices and concerns that the post-pandemic recovery is now past its peak dragged the U.S. equity benchmark 5% below its September record last week. Persistent supply bottlenecks have also raised doubts about whether stock valuations can be stretched any further. While stagflation fears may be rising, strategists at some of Wall Street’s biggest banks say it’s a good time to buy the dip in stocks.
“The surge in energy prices will slow growth, but in our view is not sufficient to cause recession,” UBS Global Wealth Management strategists led by Mark Haefele wrote in a note to clients. “Energy prices are likely to stabilize or moderate through next year.”
Here are a few events to watch this week:
- Bank of Korea policy decision and briefing Tuesday
- Atlanta Fed President Raphael Bostic speaks on inflation Tuesday
- U.S. FOMC minutes and CPI Wednesday
- China PPI, CPI Thursday
- U.S. initial jobless claims, PPI Thursday
- The S&P 500 rose 0.2% as of 9:50 a.m. New York time
- The Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index rose 0.3%
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1577
- The British pound rose 0.2% to $1.3643
- The Japanese yen fell 0.8% to 113.15 per dollar
- Germany’s 10-year yield advanced three basis points to -0.12%
- Britain’s 10-year yield advanced three basis points to 1.19%
- West Texas Intermediate crude rose 2.6% to $81.42 a barrel
- Gold futures were little changed