U.S. stocks fell, with longer-dated Treasury yields sliding, as investors assessed a growth slowdown in China and Federal Reserve Chair Jerome Powell’s persistent dovishness despite a hawkish tilt across global central banks.
The S&P 500 pushed lower after hitting an intraday high Wednesday, while the tech-heavy Nasdaq 100 was also in the red . The 10-year U.S. rate dropped to 1.32%. Netflix Inc. climbed on plans to expand into video games. The British pound fluctuated after a Bank of England policy maker said withdrawing stimulus may be appropriate soon.
China’s second-quarter growth slowed largely in line with expectations even as a pickup in consumer spending suggested a more balanced recovery. In the U.S., Powell said Wednesday that it was still too soon to scale back monetary support even though inflation has risen faster than expected. With central banks from New Zealand to Canada and the U.K. turning hawkish, traders continue to debate how far the Fed can hold back on tapering.
“It’s possible that we’ve reached peak growth, but that doesn’t necessarily mean the cycle is rolling over,” Giorgio Caputo, senior fund manager at J O Hambro Capital Management. “That being said, when you factor in those peak growth concerns, as well as what’s been going on with the delta variant and the way interest rates have been declining, it does seem like we’re having a little bit of a growth scare.”
The Fed’s potential timeline for tapering $120 billion in monthly bond purchases, and the spread of the delta Covid-19 variant, are among key variables bothering investors with global stocks near all-time highs. Another concern is the possibility that recoveries in economic growth and corporate earnings are peaking.
Powell, who made his comments at a testimony to the House Financial Services Committee, will face further questions the Senate banking panel on Thursday.
Europe’s Stoxx 600 gauge dropped for a second day, dragged down by energy shares. The benchmark for emerging-market equities, however, rose to a one-week high on Thursday, amid a report overnight of possible cooperation between Alibaba Group Holding Ltd. and Tencent Holdings Ltd.
Netflix advanced after it hired Facebook executive Mike Verdu to lead its expansion into video games. Verb Technology Co. jumped as so-called meme stocks, favored by retail investors on social-media platforms, continued a rally.
The Bloomberg Dollar Spot Index erased losses and rose for the third time in four days. West Texas Intermediate crude futures fell on expanding U.S. fuel inventories and a potential OPEC+ agreement to increase supply.
BOE’s monetary policy committee member Michael Saunders said that if economic activity and inflation remained in line with current trends, it may become appropriate “fairly soon” to withdraw some of the stimulus. The speech, released on the bank’s website, sent the pound to the lone advance among Group-of-10 peers against the dollar.
These are some of the main moves in financial markets:
Stocks
- The S&P 500 fell 0.2% as of 9:33 a.m. New York time
- The Nasdaq 100 fell 0.1%
- The Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 fell 0.8%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.2% to $1.1818
- The British pound was little changed at $1.3850
- The Japanese yen was little changed at 109.94 per dollar
Bonds
- The yield on 10-year Treasuries declined three basis points to 1.32%
- Germany’s 10-year yield declined two basis points to -0.34%
- Britain’s 10-year yield advanced two basis points to 0.65%
Commodities
- West Texas Intermediate crude fell 1% to $72.37 a barrel
- Gold futures rose 0.1% to $1,827.30 an ounce
