Tech leads stock losses as vaccine makers decline
Tech led losses in stocks, almost wiping out an advance that was driven by optimism over solid earnings and economic data.
The S&P 500 pared gains into the close while the Nasdaq erased a rally of about 1%. Moderna and Johnson & Johnson retreated, while Pfizer ended the session little changed on news that the United States will support a proposal to waive intellectual-property protections for coronavirus vaccines. Peloton tumbled after recalling its treadmill products. Copper and lumber climbed, adding to inflation worries.
As the world's largest economy rebounds, an intense debate has emerged over whether actual price pressures are set to materialize. The five-year break-even rate - a proxy for the annual inflation rate bond traders expect over the span - reached the highest mark since 2008. Despite the increase in commodity prices and supply shortages, several Fed officials said Wednesday that inflation probably will not get out of control.
Money managers who've spent the bulk of their careers profiting from deflationary trends need to quickly switch gears or risk an "inflation shock" to their portfolios, warned Marko Kolanovic, JPMorgan Chase's chief global markets strategist.
"Given the still high unemployment, and a decade of inflation undershoot, central banks will likely tolerate higher inflation and see it as temporary," he wrote. "The question that matters the most is if asset managers will make a significant change in allocations to express an increased probability of a more persistent inflation."
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Here are some key events to watch this week:
- Bank of England announces a rate decision Thursday
- The April U.S. employment report is released on Friday
These are some of the main moves in markets:
- The S&P 500 was little changed as of 4 p.m. New York time
- The Nasdaq fell 0.3%
- The Dow Jones industrial average rose 0.3%
The MSCI World index rose 0.3%
- The Bloomberg Dollar Spot index was little changed
- The euro was little changed at $1.2005
- The British pound rose 0.2%, to $1.3909
- The Japanese yen rose 0.1%, to 109.20 per dollar
- The yield on 10-year Treasuries declined two basis points to 1.57%
- Germany's 10-year yield advanced one basis point to -0.23%
- Britain's 10-year yield advanced two basis points to 0.82%
- West Texas Intermediate crude fell 0.7%, to $65 a barrel
- Gold futures rose 0.6%, to $1,787 an ounce