There’s at least a 1/3 chance we could have a deeper correction towards the end of 2021: Bill Strazzullo
Technology shares climbed amid lower Treasury yields after data showing inflation is running hot lifted companies seen as better equipped to pass on higher costs to consumers without harming their businesses.
Traders also assessed minutes of the Federal Reserve’s latest policy meeting, with officials broadly agreeing they should start reducing stimulus in mid-November or mid-December amid increasing concern over inflation. Central bankers discussed an illustrative tapering path featuring “monthly reductions in the pace of asset purchases, by US$10 billion in the case of Treasury securities and US$5 billion in the case of agency mortgage-backed securities.”
The tech-heavy Nasdaq 100 outperformed major equity benchmarks, while the NYSE FANG+ Index of giants like Amazon.com Inc. and Google’s parent Alphabet Inc. climbed more than 1 per cent. The S&P 500 rebounded, following a three-day drop. Ten-year yields fell below 1.55 per cent. The two-year rate -- which is more sensitive to policy moves -- rose. Delta Air Lines Inc. led losses in U.S. carriers after warning that rising fuel costs will threaten earnings this quarter.
Prices paid by U.S. consumers rose by more than forecast in September, underscoring inflationary pressures. The Biden administration is trying to relieve supply-chain bottlenecks ahead of the Christmas shopping season, but officials acknowledge their options are limited. Unprecedented shipping challenges, materials shortages and high commodities prices have driven up costs for producers. Many have passed a portion of those costs to customers, leading to more persistent inflation.
“Wednesday’s still elevated consumer-price index marks about six-months worth of hot inflation data -- suggesting that inflation is not as transitory as many investors previously expected,” said Nancy Davis, founder of the Greenwich, Connecticut-based firm Quadratic Capital Management. “The overall inflation story is being driven by supply-chain disruptions and a swift rise in prices, due to the labor shortage.”
Some corporate highlights:
- JPMorgan Chase & Co.’s dealmakers posted their best quarter yet, riding what’s on track to be a record year for mergers and acquisitions. Still, shares fell as consumer and commercial loan growth remained challenged.
- American Express Co. and other credit-card issuers tumbled as JPMorgan attributed weakness in its card business to rising costs on marketing and promotions, sparking concern over heightened competition.
Some of the main moves in markets:
- The S&P 500 rose 0.3 per cent as of 4 p.m. New York time
- The Nasdaq 100 rose 0.8 per cent
- The Dow Jones Industrial Average was little changed
- The MSCI World index rose 0.5 per cent
- The Bloomberg Dollar Spot Index fell 0.5 per cent
- The euro rose 0.6 per cent to US$1.1594
- The British pound rose 0.5 per cent to US$1.3662
- The Japanese yen rose 0.3 per cent to 113.30 per dollar
- The yield on 10-year Treasuries declined three basis points to 1.54 per cent
- Germany’s 10-year yield declined four basis points to -0.13 per cent
- Britain’s 10-year yield declined six basis points to 1.09 per cent
- West Texas Intermediate crude was little changed
- Gold futures rose 1.9 per cent to US$1,793.20 an ounce