US stocks fall on Covid fears in China; Earnings in Dollars: Market Recap

(Bloomberg) – US stocks fell on worries about the outlook for US growth, with the Federal Reserve pledging to persevere in the fight against inflation. Investors are also seeking shelter in the dollar as concerns grow that China could tighten Covid restrictions after a spate of reported deaths.

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The S&P 500 and the Nasdaq 100 fell. U.S.-listed Chinese stocks fell as traders weighed whether China’s reopening could face setbacks. Walt Disney Co. soared after the company was surprised to bring back former executive Bob Iger as chief executive.

The dollar appreciated against its Group of 10 peers and emerging market currencies. Pink treasures. Oil sank on fears of a weakening demand outlook from China.

China experienced its first Covid-related death in nearly six months on Saturday and two more were reported on Sunday. Worsening outbreaks across the country are raising fears authorities may again resort to harsh restrictions. A city near Beijing rumored to be a test case for ending virus restrictions has suspended schools, closed universities and asked residents to stay home for five days.

“Not only would further lockdowns in major cities stunt growth through the end of the year, but it could also complicate any plans that are in place to ease the zero-Covid policy next year,” he said. said Craig Erlam, senior market analyst. in Oanda. “We are back in uncertain territory, which could slow the stock market recovery.”

This week, traders will also look to the minutes from the Federal Reserve’s latest policy meeting for more clues on the course of rate hikes.

“This November Fed meeting feels like a long time ago, but this could be an opportunity to push markets back a bit hawkishly,” Veronica Clark, an economist at Citigroup, told Bloomberg Television on Monday. “For the Fed right now, if we’re getting some slowdown in inflation – which appears to be the case – but you don’t see it in the slowdown in services inflation, that’s tied to a market for tight labor You need to see this slack in the labor market data.

Atlanta Fed President Raphael Bostic said he favors a slower pace of interest rate hikes, with no more than a full percentage point of additional hikes, to try to secure a soft landing of the economy. Boston Fed President Susan Collins reiterated her view that options are open for the size of December’s interest rate hike, including the possibility of a 75 bp move. base.

Regarding the outlook for equities, Goldman Sachs Group Inc. strategists said investors hoping for a better year in 2023 would be disappointed as the bear market phase is not yet over.

“The conditions that are generally consistent with an equity bottom have not yet been reached,” strategists including Peter Oppenheimer and Sharon Bell wrote in a note on Monday. They said a spike in interest rates and lower valuations reflecting the recession are needed before a sustained stock market rally can occur.

Key events this week:

  • Richmond Fed U.S. Manufacturing Index, Tuesday

  • The OECD publishes its Economic Outlook on Tuesday

  • The Fed’s Loretta Mester and James Bullard speak, Tuesday

  • S&P Global PMIs: US, Eurozone, UK, Wednesday

  • U.S. MBA Mortgage Applications, Durable Goods, Initial Jobless Claims, University of Michigan Sentiment, New Home Sales, Wednesday

  • November Federal Reserve Minutes. 1-2 meeting, Wednesday

  • The ECB publishes the minutes of its October policy meeting on Thursday

  • US stock and bond markets are closed for the Thanksgiving holiday, Thursday

  • U.S. stock and bond markets close early on Friday

Some of the major movements in the markets:

Shares

  • The S&P 500 fell 0.3% at 9:30 a.m. PT

  • The Nasdaq 100 fell 0.4%

  • The Dow Jones Industrial Average rose 0.2%

  • The Stoxx Europe 600 has changed little

  • The MSCI World index rose 0.6%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.5%

  • The euro fell 0.7% to $1.0251

  • The British pound fell 0.6% to $1.1823

  • The Japanese yen fell 0.7% to 141.38 per dollar

Cryptocurrencies

  • Bitcoin fell 0.4% to $16,184.68

  • Ether fell 0.4% to $1,136.75

Obligations

  • The yield on 10-year Treasury bills fell six basis points to 3.77%

  • Germany’s 10-year yield fell six basis points to 1.96%

  • The UK 10-year yield fell five basis points to 3.19%

Goods

  • West Texas Intermediate crude fell 2.3% to $78.25 a barrel

  • Gold futures fell 0.4% to $1,762.30 an ounce

This story was produced with assistance from Bloomberg Automation.

–With help from Tassia Sipahutar, Robert Brand, Peyton Forte, Isabelle Lee and Brett Miller.

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