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Wall Street muted on mixed inflation messages

  • US stocks stagnate after Friday’s selloff
  • Treasury yields fall
  • Oil up almost 2%, off multi-month lows

Aug 8 (Reuters) – Wall Street stocks were mostly flat on Monday, the dollar weakened and U.S. government bond yields fell as investors weighed mixed messages about inflation and how far point the Federal Reserve could be aggressive in combating it.

The Dow Jones Industrial Average (.DJI) rose just 0.09% on the day, while the S&P 500 (.SPX) lost 0.12% and the Nasdaq Composite (.IXIC) fell 0. .1% learn more

Of note is Nvidia Corp (NVDA.O), whose shares fell about 6% after the chip designer warned on Monday that its second-quarter revenue would fall 19% from the previous quarter due to the weakness of its gaming activity. Read more

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The broad Euro STOXX 600 index (.STOXX) ended up around 0.75% on Monday, led by cyclical and growth stocks, helping it recoup losses from Friday. But the MSCI World Equity Index (.MIWD00000PUS), which tracks stocks from 47 countries, added just 0.15%. Read more

“With the strength of the labor market, the threat of a recession seems remote, but concerns about the aggressiveness of the Federal Reserve hang over the market,” said Quincy Krosby, chief global strategist for LPL Financial, in an email.

Indeed, the rise in interest rates remained at the center of investors’ concerns.

Surprisingly strong US jobs data last week raised the stakes for July’s US consumer price report due on Wednesday, which could see a further acceleration in inflation – and more aggressive interest rate hikes from the Federal Reserve.

Business investment appears to have been one of the first victims of rising prices and rates, according to new data from the US government. Read more

Meanwhile, U.S. consumer expectations for inflation one year and three years ahead fell sharply in July, a survey by the New York Federal Reserve showed on Monday, a victory for policymakers . Read more

On Monday, yields on the benchmark 10-year note fell to 2.751%, after hitting 2.869% on Friday, the highest since July 22. Two-year yields were last at 3.211%, after hitting 3.331% on Friday, the highest since June 16.


“Rising inflation and the Fed’s reaction to it have been a real headwind for valuations this year,” Morgan Stanley strategists wrote in a note on Monday. “However, that has also been a tailwind for earnings. Now we are on the other side of that mountain, and operating leverage is likely higher than the consensus expects.”

Fed funds futures traders are now pricing in a 67.5% chance of another 75 basis point rate hike in September, and of the fed funds rate rising to 3.65% in September. here March, compared to 2.33% currently.

“We see inflation remaining above the Fed’s 2% target through next year,” strategists at the BlackRock Investment Institute wrote in a note on Monday. “We think the Fed will continue to heed calls to get inflation under control until it recognizes that doing so will dampen growth.”

In the currency markets, the US dollar fell around 0.2% against a basket of six major currencies at 106.4 , giving up some gains after strengthening on the jobs boom and the slowdown. increase in yields. Read more

Economic surprises

Analysts remained bullish on the outlook for the US currency.

“Data like this will fuel any thinking about ‘US exceptionalism’ and is very positive for the USD against all currencies,” said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank, making reference to employment statistics in the United States.

The euro fell slightly to $1.019.

Bitcoin and other cryptocurrencies, which tend to serve as a barometer of risk appetite, gained. Bitcoin was last up 3.25% at $23,942.

Italy spread

Gold broke higher on Monday as the dollar and Treasury yields retreated. Spot gold rose 0.8% to $1,788 an ounce, after falling 1% in the previous session. US gold futures rose 0.76% to $1,786.

Oil prices rebounded a bit on Monday but were still near their lowest levels in months in volatile trading as positive economic data from China and the United States boosted hopes for growth in demand despite recession fears. Read more

U.S. crude recently rose 1.79% to $90.59 a barrel and Brent to $96.40, up 1.59% on the day.

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Reporting by Lawrence Delevingne in Boston, Tom Wilson in London and Wayne Cole in Sydney; Editing by Jane Merriman, Peter Graff and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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