Wall Street stocks drift ahead of US inflation data

Wall Street stocks fell ahead of US inflation data later in the week, which could determine the future direction of central bank monetary policy.

The broad S & P 500, Wall Street’s dominant stock index, fell 0.3%. The Nasdaq Composite Index, which focuses on technology, was flat.

The Stoxx Europe 600 rose 0.2%, ending the session with record highs. Relatively cheap European stocks. The UK FTSE 100 rose 0.1%.

Economists surveyed by Bloomberg expect consumer prices in May to rise 4.7% year-on-year, as US inflation data on Thursday show, following an unexpectedly large rise in April. Core inflation, excluding volatile food and energy costs, is projected to reach 3.4% year-on-year, the highest since 1993. Data from the Federal Reserve Bank of St. Louis..

The Federal Reserve Board of Governors (FRB), which will meet next week, sees strong inflation as a temporary impact of the resumption of economic activity after the pandemic blockade. However, investors are paying attention to sustained price increases that may force monetary policymakers to raise interest rates faster than planned. Since March last year, the Fed has purchased $ 120 billion in assets each month, keeping borrowing costs at record lows.

“This year will be a year of monetary policy transition,” said Gergely Majoros, a member of the investment committee of European fund manager Carminac. After getting used to the strong support of the central bank, he added, “The transition will be difficult for investors to manage.”

US Treasury Secretary Janet Yellen told Bloomberg yesterday that President Joe Biden’s trillion-dollar fiscal stimulus would be “plus” if it led to a slight rise in interest rates.

“We’ve been fighting too low inflation and too low interest rates for the last decade,” Yellen said.

Patrick Spencer, vice chairman of equity for equity broker Baird, added that the financial markets were “overheated with cheap money.” Meme stock Preferred by retail traders Enthusiastic price fluctuations In cryptocurrency. “You need to cut off the sugar.”

Carmignac’s Majoros added that stock market investors are also concerned that companies will not be able to meet analysts’ bullish earnings expectations.

After the booming first-quarter closing season on both sides of the Atlantic, forecasters significantly raised their expectations for second-quarter results as the economy resumed and businesses benefited from the recovery in demand.

“Analyst optimism has reached an extreme level,” Liberum strategists Joachim Clement and David Mack commented in a research note.

“We expect the next closing season to be a realistic check for many analysts and investors.”

Yields on 10-year Treasuries, which are inversely proportional to price, rose 0.01 points to 1.565%. Yields have risen by about 0.9% since early 2021 as investors expected inflation to rise, which undermines the value of fixed-rate bond payments.

Brent crude fell 0.6% to $ 71.45 a barrel after reaching its highest level since May 2019 in Asian trading early Monday.

In currency, the Mexican peso rose 0.9% to $ 1 19.77 after Andres Manuel Lopez Obrador. It looked like a set The euro, which lost a two-thirds majority in the Mexican House of Representatives needed for a significant constitutional amendment, rose 0.3% against the dollar to $ 1.2199. Sterling rose 0.2% to $ 1.4177.

Wall Street stocks drift ahead of US inflation data

Source link Wall Street stocks drift ahead of US inflation data

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