NEW YORK (Reuters) – U.S. stocks closed mixed on Monday as downbeat Chinese and New York state data fueled recession fears, but the 10-year Treasury yield remaining steady at less than 3% spurred hopes the Federal Reserve will raise interest rates cautiously. walking long distances.
Retail and factory activity in China fell sharply in April, as the COVID-19 shutdown severely disrupted supply chains while factory production in New York fell in May for the third time this year amid a collapse in new orders and shipments. Read more
Chinese data casts a long shadow over the world’s second largest economy while a sharp decline in manufacturing in New York may be an early sign of the impact of the Federal Reserve’s plans to tighten monetary policy to tackle rapidly rising inflation.
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MSCI’s benchmark for stocks worldwide (.MIWD00000PUS.)It closed 0.21% lower and Treasury yields fell, with the benchmark 10-year note down 4.7 basis points at 2.886% after hitting 3.2% a week ago. Some see the decline since then as a sign that the market has priced in all or most of the rate hikes expected from the Fed.
“The most important thing happening in the market right now is the fact that the 10-year return has remained below 3%,” said Tom Hayes, Chairman and Managing Director at Great Hill Capital LLC.
Five Federal Reserve officials scheduled to speak on Tuesday is also key given the recent market stumble, he said.
“Usually when you get close to a low in the market and you have five Fed speakers, they generally aren’t there to talk about the market going down,” Hayes said.
He said that with earnings growth turning positive and a reasonable price-to-earnings ratio, stocks have become more attractive.
Pan-European STOXX 600 Index (.stoxx) Ended flat, up 0.04%, with German down (.GDAXI) And French (.fchi) Indices close lower and the British FTSE 100 (.FTSE) rise in the day.
Emerging market stocks (MSCIEF) It rose 0.30% and on Wall Street, the Dow Jones Industrial Average (.DJI) It rose 0.08%, but the S&P 500 (.SPX) The Nasdaq Composite Index lost 0.39% (nineteenth) It decreased by 1.2%.
China remains a problem, said Tim Greske, senior portfolio strategist at Ingalls & Snyder, as well as Europe, especially Eastern Europe and Putin’s threats towards Finnish and Swedish plans to join NATO.
“When you see big days, I’m not surprised to see some profit taking the next day,” Greske said, referring to Friday’s rally on Wall Street. “We are simply seeing a reaction to the recent strength. There are many factors moving the market, but overall, none of them are very positive.”
Goldman Sachs raised its 2022 earnings per share growth forecast to 8% from more than 5%, but lowered its year-end target for the S&P 500 to 4,300 from 4,700 due to interest rates and growth concerns.
Former Goldman Sachs CEO Lloyd Blankfein said Sunday that he believes the US economy is at risk of entering a recession as the Federal Reserve continues to raise interest rates to tackle rising inflation. Read more
The dollar fell slightly after hitting a 20-year high last week.
The dollar index slipped 0.316%, with the euro gaining 0.18% to $1.0431, and the Japanese yen gaining 0.09% to 129.07 per dollar.
Biban Ray, head of North American FX strategy at CIBC Capital Markets, said the dollar is likely to rise due to the macroeconomic outlook, whose fundamentals do not look good.
“From a risk aversion perspective, that should still support the dollar against most currencies,” Ray said.
However, he said the dollar is consolidating after the recent strength and may see more range-bound trading sessions.
The euro is nearing its lowest levels since 2017. Francois Villeroy de Gallo, policy maker at the European Central Bank, said a weaker euro could threaten the central bank’s efforts to steer inflation toward its target. Read more
Gold rose slightly as lower Treasury yields offset headwinds from a relatively strong dollar that, combined with the possibility of a rate hike, pushed bullion to a more than 3-1/2-month low.
US gold futures rose 0.3% to $1,814 an ounce.
Oil rallied as the European Union approached a ban on importing Russian crude, and traders saw signs of the COVID-19 pandemic abating in the hardest-hit regions of China, suggesting a major recovery in demand is underway.
US crude futures rose $3.71 to $114.20 a barrel, while Brent rose $2.69 to settle at $114.24 a barrel.
Bitcoin was last down 5.21% to $29664.88.
European government bond yields rose, with the German 10-year bond yield falling 0.9 basis points at 0.943% – below an eight-year high of 1.19% reached last Monday.
The European Central Bank at its next meeting is likely to decide to end its stimulus program in July and raise interest rates “very soon” after that, ECB policymaker Pablo Hernandez de Cos said on Saturday. Read more
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(Herbert Lash Report) Additional reporting by Elizabeth Howcroft in London; Editing by Ed Osmond, Chizu Nomiyama, Jonathan Oatis and Richard Chang
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