Markets wrap: Stocks drop as inflation angst curbs risk appetite
Stocks fell on concern that inflation could pose a challenge to the global economic rebound, forcing central banks to raise interest rates sooner than expected. Treasuries rose.
Traders took some risk off the table as data showed new U.S. home construction slowed down - suggesting builders are struggling to break ground on projects amid high materials prices and ongoing labor shortages. Target Corp. sank after warning that cost pressures are creeping up, stoking fears that inflation will dent profits at retailers. The technology-heavy Nasdaq 100 outperformed major benchmarks, led by a rally in giants Apple and Tesla.
"While we remain structurally bullish on stocks, we do anticipate a push-and-pull of market dynamics into year-end given inflation concerns, supply-chain pressures, labor shortages, and fiscal uncertainty," said Andrea Bevis, senior vice president at UBS Private Wealth Management.
Markets could face a rocky time ahead as the economy seeks to emerge from the abrupt impact of the pandemic, according to Goldman Sachs Group Chief Executive Officer David Solomon. In case rates move up, that "will take some of the exuberance out of certain markets," he said in an interview at the Bloomberg New Economy Forum in Singapore.
Inflation is "clearly not as transitory as some might have hoped, but we're not at the point yet where we could definitively say that it's ingrained or persistent," said Giorgio Caputo, senior portfolio manager at J O Hambro Capital Management.
The worst quarter for the S&P 500 since the start of the pandemic appears to have driven away some do-it-yourself investors. The retail trading surge that began with lockdowns has now abated, as total equity volume from individual investors fell to 19% in the third quarter, down from 24% at the start of this year, according to Securities and Exchange Commission and market data compiled by Bloomberg Intelligence.
Some other corporate highlights:
- Amazon is considering shifting its popular co-brand credit card to Mastercard amid simmering tensions with Visa - a feud that already prompted the retailer to ban the payment giant's cards in the U.K.
- Chobani filed for an initial public offering, disclosing steady growth as the company continues to build on sales of its namesake yogurt brand.
- American Airlines Group expects travel to rebound to pre-pandemic levels in 2022, said Chief Executive Officer Doug Parker.
Home-improvement giant Lowe's raised its sales forecast for this year. TJX Cos. climbed after the off-price retailer's results topped estimates.
Elsewhere, oil tumbled as investors considered the prospect of a release of crude supplies from strategic reserves.
Stocks
- The S&P 500 fell 0.3% as of 4 p.m. New York time
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average fell 0.6%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro was little changed at $1.1322
- The British pound rose 0.5% to $1.3492
- The Japanese yen rose 0.6% to 114.12 per dollar
Bonds
- The yield on 10-year Treasuries declined five basis points to 1.59%
- Germany's 10-year yield was little changed at -0.25%
- Britain's 10-year yield declined three basis points to 0.96%
Commodities
- West Texas Intermediate crude fell 2.9% to $78.40 a barrel
- Gold futures rose 0.8% to $1,868.80 an ounce
