Stocks Retreat in Cautious End to Turbulent Month: Markets Wrap

(Bloomberg) — Stocks slide along with US equity futures as disappointing results from tech giants soured sentiment and marred a tentative recovery in equities. Treasury yields rose.

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Contracts on the tech-heavy Nasdaq 100 paced losses, slumping more than 1% on Amazon.com Inc.’s plunge after hours as its sales forecast trailed estimates. S&P 500 futures and the Stoxx Europe 600 both slide about 1%.

Despite the downturn, the S&P 500 is heading for a second week of gains for the first time since August.

Treasury yields turned higher, retracing some of their recent, though the 10-year remained drop under the 4% threshold.

Less-hawkish-than-expected decisions by the European Central Bank and the Bank of Canada this week have reignited hopes that policymakers are preparing a downshift in aggressive rate hikes, with all eyes on the Federal Reserve next week.

Economists still expect the Fed to hike by three-quarters of a percentage point for the fourth time in a row when it meets next week.

But with recent data highlighting the effects of sharp rate hikes on the economy, investors expect the FOMC to slow the pace of tightening after November’s meeting.

Read: Bond Bulls Bet on Plateau in Rates as Dovish Signals Grow

The combination of weaker earnings and higher interest rates is making technology stocks look increasingly unappealing to investors.

Amazon shares plunged almost 20% in extended trading before paring losses, after the tech giant projected sluggish sales for the holiday quarter. Apple Inc. was steady in post-market trading after posting weaker-than-expected iPhone and services sales for its latest quarter.

Elsewhere, oil headed for a weekly gain, supported by tightness in petroleum product markets, robust US exports, and a weakening dollar. Gold was set for its second weekly climb and Bitcoin traded above $20,000.

Chinese assets also remained in focus, with foreign investors dumping a record amount of mainland China stocks this week and sending Hong Kong equities to a 13-year low. President Xi Jinping’s tightening grip on power hasn’t had the same impact domestically, with mainland investors hunting for bargains in Hong Kong.

Key events this week:

  • US personal income, personal spending, pending home sales, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

stocks

  • The Stoxx Europe 600 fell 1.1% as of 8:28 am London time

  • Futures on the S&P 500 fell 1.1%

  • Futures on the Nasdaq 100 fell 1.4%

  • Futures on the Dow Jones Industrial Average fell 0.5%

  • The MSCI Asia Pacific Index fell 1.7%

  • The MSCI Emerging Markets Index fell 1.8%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.3%

  • The euro fell 0.2% to $0.9947

  • The Japanese yen fell 0.4% to 146.91 per dollar

  • The offshore yuan was little changed at 7.2596 per dollar

  • The British pound fell 0.4% to $1.1518

Cryptocurrencies

  • Bitcoin fell 1% to $20,204.5

  • Ether fell 1.6% to $1,503.98

bonds

  • The yield on 10-year Treasuries advanced six basis points to 3.98%

  • Germany’s 10-year yield advanced eight basis points to 2.04%

  • Britain’s 10-year yield advanced five basis points to 3.45%

Commodities

  • Brent crude fell 1.3% to $95.73 a barrel

  • Spot gold fell 0.6% to $1,652.74 an ounce

–With assistance from Michael Msika and Kurt Schussler.

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