US stocks drifted lower as a rally in technology stocks lost steam while Treasuries fell after an unexpected increase in Canada’s interest rates.
(Bloomberg) — US stocks drifted lower as a rally in technology stocks lost steam while Treasuries fell after an unexpected increase in Canada’s interest rates.
The S&P 500 edged down 0.2% after earlier gains in technology and commodity stocks. A broader market advance was fleeting as traders briefly priced in a quarter point hike in US interest rates by July. The Nasdaq 100 slid more than 1% with technology giants Microsoft Corp., Amazon.com Inc. and Google-parent Alphabet Inc. dragging down the benchmark.
The S&P 500 briefly surpassed a 20% increase from an October low on Wednesday, commonly thought of as the marker of a bull market. The frenzy surrounding artificial intelligence lost some of its momentum this week, chipmakers Advanced Micro Devices Inc. and Nvidia Corp. slumped on Wednesday.
Expectations of higher interest rates for longer, in order to combat inflation, has weighed on tech shares with lofty expectations for profit growth. Policy decisions are due from the Federal Reserve and the European Central Bank next week, with the Fed signaling it may pause rate hikes in June before resuming them later.
“One of the things I’m a little nervous about is that the rates market got a little too carried away about the central banks being able to quickly pre-emptively cut rates,” said Karen Ward, chief market strategist for EMEA at JPMorgan Asset Management, in an interview with Bloomberg TV. With rates markets pricing out some expected cuts, “that to me puts some of those growth, those megacap tech valuations, a little at risk,” she said.
Treasury Yields Nudging Higher Shows Fed in Pause-and-Hike Mode
In currency markets, Turkey’s lira slumped about 7% to a record low against the dollar amid increasing signs that policy makers may be scaling back interventions to support the currency. President Recep Tayyip Erdogan’s appointment of former Merrill Lynch strategist Mehmet Simsek as his new Treasury and finance minister has sparked expectations of a return to more orthodox monetary policy and raised the prospect of reduced intervention in markets.
Elsewhere, a gauge of greenback’s strength weakened. Gold slumped. And Bitcoin slid in the wake of a sweeping crackdown by US regulators.
Key events this week:
- Eurozone GDP, Thursday
- Rate decisions in India, Peru, Thursday
- Japan GDP, Thursday
- US wholesale inventories, initial jobless claims, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.2% as of 12:39 p.m. New York time
- The Nasdaq 100 fell 1.2%
- The Dow Jones Industrial Average rose 0.2%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0698
- The British pound rose 0.1% to $1.2439
- The Japanese yen fell 0.3% to 140.09 per dollar
Cryptocurrencies
- Bitcoin fell 2.1% to $26,372.87
- Ether fell 2% to $1,839.66
Bonds
- The yield on 10-year Treasuries advanced 13 basis points to 3.79%
- Germany’s 10-year yield advanced eight basis points to 2.46%
- Britain’s 10-year yield advanced four basis points to 4.25%
Commodities
- West Texas Intermediate crude rose 1.5% to $72.81 a barrel
- Gold futures fell 1.2% to $1,958.40 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Joanna Ossinger and Tassia Sipahutar.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.