Big tech drop weighs on stocks; bond selloff eases
BNN Bloomberg
U.S. stocks struggled to push higher amid declines in megacap tech shares. The selloff in Treasuries eased as policy makers pushed back against feverish rate-hike speculation stoked by red-hot inflation.
U.S. stocks struggled to push higher amid declines in megacap tech shares. The selloff in Treasuries eased as policy makers pushed back against feverish rate-hike speculation stoked by red-hot inflation.
The S&P 500 was little changed while the tech-heavy Nasdaq 100 slipped 0.4 per cent, following Thursday’s steep declines amid bets on faster Federal Reserve tightening. Treasuries gained notably at the short end of the curve, with the two-year yield dipping three basis points after jumping the most since 2009 on Thursday.
Bonds and stocks were pummeled Thursday by the surprise jump in U.S. inflation last month that stirred hawkish comments from St. Louis Fed Chair James Bullard, who said he supports raising rates by a full percentage point by the start of July, and may consider a move in between scheduled policy reviews. Other Fed officials, though, are in no rush to raise rates prior to their meeting next month, nor does a 50 basis points March move appear likely yet.
Inflation concerns weighed on U.S. consumer sentiment, which declined further in early February to a fresh decade low as views about personal finances deteriorated. The University of Michigan’s sentiment index dropped to 61.7, the lowest since October 2011, from 67.2 in January. Consumers expect an inflation rate of 5 per cent over the next year, up from last month’s reading of 4.9 per cent and the highest since 2008.
“There is probably some disagreement within the FOMC on whether inflation can be reduced quickly by aggressive policy that signals an unwavering commitment to get inflation back to target,” Steven Englander, global head of G-10 FX research at Standard Chartered Bank, wrote in a note. Englander expects quarter-point Fed hikes in March, May, June and July, but added “there is a case for even more front-loading.”
