U.S. stocks swung between gains and losses as traders geared for a string of earnings reports from technology heavyweights including Facebook Inc., while keeping in mind inflation concerns and rising Covid-19 risks.
The S&P 500 was positive after whipsawing traders at the start of trading, while the Nasdaq 100 maintained gains. PayPal Holdings Inc. rose after the company said it isn’t pursuing an acquisition of Pinterest Inc., ending days of speculation over a potential $45 billion deal. Tesla Inc. advanced after receiving an order for 100,000 cars from Hertz Global Holdings Inc. Still to come: the five largest U.S. technology companies are set to report earnings, starting with Facebook on Monday.
The 10-year U.S. Treasury yield was little changed and the dollar gained after Federal Reserve Chair Jerome Powell flagged that inflation could stay higher for longer, fueling investor concern that sticky price increases may force policy makers to raise borrowing costs.
The Stoxx Europe 600 index was little changed. The basic-resources sector advanced as crude oil and metals extended gains, while banks rose on HSBC Holdings Plc’s bright outlook. Spain’s Banco de Sabadell SA jumped more than 5% after rejecting an offer for its U.K. unit. Industrials and consumer goods were the biggest losers.
“Inflation concerns will continue to dominate markets this year as the price of crude oil remains elevated,” while “the pandemic remains a central concern,” said Siobhan Redford, an analyst at FirstRand Bank Ltd. in Johannesburg. “This will add further complexity to the already difficult decisions facing policy makers around the world.”
Global equities have remained resilient despite risks from price pressures stoked by supply-chain bottlenecks and higher energy costs. Treasury Secretary Janet Yellen is among those counseling the inflation situation reflects temporary pain that will ease in the second half of 2022. Investors are wary that tighter monetary policy to keep inflation in check will stir volatility.
Traders are also monitoring an outbreak of the delta virus strain in China that is expected to worsen. The nation sought to allay concerns about the economy’s slowdown with a lengthy state media commentary outlining how the government is managing risks and remains confident about achieving its targets for the year.
Meanwhile, the European Central Bank’s meeting this week will be closely watched for guidance on its pandemic bond-buying program.
Gold advanced above $1,800 an ounce and crude oil extended a rally. Saudi Arabia said that the OPEC+ alliance should maintain its cautious approach to managing global crude supplies given the threat to demand still posed by the pandemic. Bitcoin advanced toward $63,000.
Elsewhere, the lira fell to a fresh record after Turkey’s President Recep Tayyip Erdogan warned that 10 ambassadors, including those from the U.S., Germany and France, were no longer welcome after they had demanded the release of a businessman and philanthropist. The Turkish currency was already under pressure after last week’s larger-than-expected rate cut.
Here are some events to watch this week:
- Earnings: Amazon, Apple, Facebook, Microsoft, Twitter, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group
- Australia CPI, Wednesday
- U.S. wholesale inventories, U.S. durable goods, Wednesday
- Bank of Japan monetary policy decision, briefing, Thursday
- ECB rates decision, President Christine Lagarde briefing, Thursday
- U.S. GDP, initial jobless claims, Thursday
- G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.1% as of 10:01 a.m. New York time
- The Nasdaq 100 rose 0.3%
- The Dow Jones Industrial Average was little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.3% to $1.1609
- The British pound was unchanged at $1.3755
- The Japanese yen fell 0.2% to 113.70 per dollar
Bonds
- The yield on 10-year Treasuries was little changed at 1.63%
- Germany’s 10-year yield was little changed at -0.11%
- Britain’s 10-year yield was little changed at 1.14%
Commodities
- West Texas Intermediate crude rose 1.6% to $85.06 a barrel
- Gold futures rose 0.6% to $1,807.20 an ounce
