Stocks drop, oil whipsaws amid economic concern
BNN Bloomberg
Stocks pushed lower as investors assessed an unexpectedly weak reading on U.S. services and the economic impacts of the war in Ukraine. Oil whipsawed.
Stocks pushed lower as investors assessed an unexpectedly weak reading on U.S. services and the economic impacts of the war in Ukraine. Oil whipsawed.
Traders also watched closely Federal Reserve Chair Jerome Powell’s remarks in the second day of his semi-annual testimony to U.S. lawmakers. He noted that the surge in energy prices will likely spill into inflation and if that shift proved to be lasting, it could put upward pressure at the “margin” to longer-term expectations that the central bank wants to stop creeping up. He said a US$10-a-barrel price hike is about one-tenth of a percent hit to growth. Powell also noted that the conflict in Ukraine could hit sentiment, harming investment spending.
Brent crude traded in a wide a range of almost US$10 on Thursday. The S&P 500 erased gains, while the tech-heavy Nasdaq 100 underperformed major benchmarks. Bonds and the dollar rose.
Growth in the U.S. services sector retreated in February to a one-year low as orders softened along with business activity, an indication supply constraints remain a hurdle for the economy. The Institute for Supply Management’s gauge of services fell 3.4 points to 56.5, below even the most pessimistic estimate in a Bloomberg survey of economists, according to data released Thursday. Readings above 50 signal expansion.
Treasuries reached “extreme overbought territory” prior to Wednesday’s rebound in yields, according to JPMorgan Chase & Co. strategists. On a technical basis, the bank’s strategists still view the bear market as intact and expect the 10-year yield to exceed 2 per cent in the months ahead.
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