A renewed bout of equity volatility gripped the stock market, with traders weighing economic data for clues on whether prospects for a soft landing are still on the table amid the Federal Reserve’s most-aggressive tightening campaign in a generation.
(Bloomberg) — A renewed bout of equity volatility gripped the stock market, with traders weighing economic data for clues on whether prospects for a soft landing are still on the table amid the Federal Reserve’s most-aggressive tightening campaign in a generation.
The S&P 500 was little changed after a rally that approached 1% — with losses in megacaps like Apple Inc., Amazon.com Inc. and Tesla Inc. weighing heavily on trading. The gauge hovered near the 4,000 level that traders are monitoring for support. Netflix Inc. tumbled on plans to cut prices in certain markets. A bullish revenue outlook from Nvidia Corp. spurred a surge of as much as 15% for the shares.
Pressure came off the bond market, with the two-year yield little changed after climbing in the initial aftermath of Thursday’s economic figures.
US claims for unemployment benefits signaled unrelenting tightness in the labor market. Meantime, growth in the fourth quarter was weaker than previously estimated, reflecting a downward revision to consumer spending as the Fed’s preferred inflation figures were revised higher.
“The market is caught between welcoming the evidence that the US economy remains on a stable footing and fearing that this resilience will provoke a stern reaction” from policymakers, said Michael Shaoul at Marketfield Asset Management. “Granted things could be worse, the specter of a rapid deterioration of the economic cycle appears to have been banished, with recent economic data and corporate earnings both confirming that although growth has decelerated from the stimulus driven boom, we have not entered a period of obvious weakness.”
Federal Reserve Bank of New York President John Williams said it’s critical that the central bank remains committed to its 2% inflation goal, and emphasized monetary policy must bring supply and demand into better balance to lower inflation.
In other corporate news, EBay Inc. projected revenue in the current quarter that didn’t convince investors the company’s efforts to revive sales are beginning to work. Moderna Inc. kept its forecast for at least $5 billion in sales of its Covid-19 vaccine this year, well short of analysts’ estimates. Alibaba Group Holding Ltd.’s profit surged 69%, as China’s e-commerce leader kept a lid on costs and shoppers continued to spend online while the pandemic raged.
The Nasdaq 100 is testing a key technical level that has been in place since September, which is also close to the 200-day moving average, while technical breadth remains neutral based on the Relative Strength Index. The threshold, just above the psychologically important 12,000 mark, had capped gains between September and February and may now act as a strong support indicator.
Key events this week:
- BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday
- US PCE deflator, personal spending, new home sales, University of Michigan consumer sentiment, Friday
- Russia’s invasion of Ukraine hits the one-year mark, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 was little changed as of 11:08 a.m. New York time
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average was little changed
- The Stoxx Europe 600 rose 0.2%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0592
- The British pound fell 0.2% to $1.2018
- The Japanese yen was little changed at 134.88 per dollar
Cryptocurrencies
- Bitcoin rose 0.5% to $23,917.38
- Ether rose 2.1% to $1,654.1
Bonds
- The yield on 10-year Treasuries was little changed at 3.91%
- Germany’s 10-year yield declined four basis points to 2.48%
- Britain’s 10-year yield declined one basis point to 3.59%
Commodities
- West Texas Intermediate crude rose 2.1% to $75.47 a barrel
- Gold futures fell 0.7% to $1,828.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jessica Menton, Michael Msika and Isabelle Lee.
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