September 24, 2022

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Stocks fluctuate after US jobs report of heavy selling

Stocks fluctuate after US jobs report of heavy selling

  • US stocks were mixed after Friday’s heavy selling
  • Treasury yields fall
  • Oil is up 1%, from multi-month lows

(Reuters) – Global stock markets were mostly flat on Monday, unable to recover much from last week’s heavy selling triggered by a strong US jobs report that reinforced the case for sharp interest rate hikes. The dollar weakened and government bond yields fell.

On Wall Street, the Dow Jones Industrial Average (.DJI) It rose 0.08% to 3,2831.23; Standard & Poor’s 500 (.SPX) It lost 0.05% to 4,143.27; And the Nasdaq (nineteenth) It only added 0.04% to 12,662.28. Read more

Euro Stoxx 600 wide (.stoxx) It was up about 0.75% on Monday, led by economic and growth stocks, which helped it recover from its losses on Friday. MSCI World Stock Index (.MIWD00000PUS), which measures stocks in 47 countries, added just 0.22%. Read more

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High rates remained the focus for investors.

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

Indeed, business investment appears to have been an early victim of severe US inflation and rising interest rates, according to new US government data. Read more

Strong US jobs data raised the risks of the US consumer price report for July due on Wednesday, which could see a further acceleration in inflation.

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“We see inflation remaining above the Fed’s 2% target over the next year,” strategists at the BlackRock Investment Institute wrote in a note Monday. “We believe the Fed will continue to respond to calls to tame inflation until it recognizes how that growth has stalled.”

US Treasury yields fell as investors continued to digest the jobs report and how the Fed will react. Fed fund futures traders are now pricing in a 67.5% chance of another 75 basis point rate increase in September, and for the fed funds rate to rise to 3.65% by March, from 2.33% now.

The benchmark 10-year yield fell to 2.764% on Monday, after rising to 2.869% on Friday, the highest since July 22. The two-year bond yield was last at 3.217%, after hitting 3.331% on Friday, the highest since June. 16.

dollar exception?

The US dollar fell nearly 0.5% against a basket of six major currencies to 106.19, giving up some gains after strengthening as jobs boomed and yields jumped.

Foreign exchange analysts were optimistic about the outlook for the US currency.

“Data like this will add to any thoughts of ‘US exceptionalism’ and it is very positive for the US dollar against all currencies,” said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank, referring to US jobs statistics.

The euro trimmed its meager gains to reach $1.02.

Economic surprises

Bitcoin and other cryptocurrencies have gained, which tends to act as a measure of risk appetite. Bitcoin was last up 3.3% to $23,952.

Gold broke higher on Monday as dollar and treasury yields tumbled. Spot gold rose 0.8 percent to $1,787 an ounce, after declining 1 percent in the previous session. US gold futures rose 0.66% to $1,784.

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Oil prices rose on Monday, near their lowest levels in months in volatile trading as positive economic data from China and the United States spurred hopes of demand growth despite recession fears. Read more

US crude rose 1% to $89.91 a barrel, and Brent crude also rose about 1% to $95.91 a barrel.

Italy spread
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Additional reporting by Lawrence Delevingne in Boston, Tom Wilson in London and Wayne Cole in Sydney; Editing by Andrew Heavens, Bernadette Baum and Jane Merriman

Our criteria: Thomson Reuters Trust Principles.