Stocks fluctuated, with traders expecting the Federal Reserve to signal a pause in its aggressive hiking cycle after a potential rate hike in May.
(Bloomberg) — Stocks fluctuated, with traders expecting the Federal Reserve to signal a pause in its aggressive hiking cycle after a potential rate hike in May.
The S&P 500 swung between small gains and losses. Treasury yields dropped alongside the dollar. Crude futures dipped below $70 a barrel in New York as the prospect of a US recession threatened to curb fuel demand.
“Despite contagion spreading across the regional bank space, we expect the Fed to squeeze in a final 25 basis point hike before pausing to assess the impact of the significant and rapid tightening to date,” Mizuho strategists Evelyne Gomez-Liechti and Helen Rodriguez wrote in a note.
Adding to the uncertain mood is a lack of clarity regarding the US debt ceiling. Between now and June 1 — the date by which the Treasury Department may run out of sufficient cash — President Joe Biden and members of the House and Senate are scheduled to be in town at the same time for one week to find a solution.
“It is a key event risk in the next few weeks and possibly a month or two,” Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management in Singapore, said on Bloomberg Television. “It feeds into our overall defensiveness, which we are advocating in our asset allocation recommendations to be long fixed income in this kind of an environment and underweight equities.”
On the economic front, the US service sector expanded only modestly in April, restrained by the weakest pace of business activity in nearly three years. US companies increased payrolls in April by the most in nine months, highlighting a resilient labor market even as the economy cools.
Key events this week:
- US initial jobless claims, trade balance, Thursday
- European Central Bank rate decision, followed by ECB President Christine Lagarde’s news conference, Thursday
- US unemployment, nonfarm payrolls, Friday
Here are some of the main market moves:
Stocks
- The S&P 500 rose 0.2% as of 12:04 p.m. New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones Industrial Average was little changed
- The Stoxx Europe 600 rose 0.3%
- The MSCI World index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.4% to $1.1047
- The British pound rose 0.6% to $1.2545
- The Japanese yen rose 0.9% to 135.33 per dollar
Cryptocurrencies
- Bitcoin fell 1.3% to $28,316.32
- Ether fell 0.9% to $1,853.86
Bonds
- The yield on 10-year Treasuries declined four basis points to 3.38%
- Germany’s 10-year yield declined one basis point to 2.25%
- Britain’s 10-year yield advanced three basis points to 3.70%
Commodities
- West Texas Intermediate crude fell 3.9% to $68.83 a barrel
- Gold futures rose 0.4% to $2,032.40 an ounce
This story was produced with the assistance of Bloomberg Automation.
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