Wall Street struggled for direction and Treasury yields resumed their uphill climb as the equity market’s broad rally of recent days appeared to lose momentum.
The three major U.S. stock indexes wavered between red and green out of the starting gate, while the benchmark Treasury yield shot up to touch a new 14-year high.
”The market is taking a breather,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. ”It's a combination of a pause after rally, some concern over higher-than-expected inflation in Great Britain, and some companies expressing caution about the outlook going forward.”
Market participants are juggling a spate of mixed earnings – notably from Procter & Gamble, Travelers Companies Inc, Baker Hughes Co – with ongoing worries over whether central bank interest rate hikes to contain the inflation pandemic could push the global economy into contraction.
”Some sort of (economic) downturn is baked in and whether its mild or severe, time will tell,” Tuz added. ”There was a lot of pessimism, when some of the earnings and guidance came in, we had a relief rally and reality seeps in after a few days of that and thats where we find ourselves today.”
The Dow Jones Industrial Average rose 22.25 points, or 0.07%, to 30,546.05, the S&P 500 lost 13.9 points, or 0.37%, to 3,706.08 and the Nasdaq Composite dropped 51.39 points, or 0.48%, to 10,721.01.
Renewed inflation fears also helped European stocks snap their recent winning streak and distracted investors from better-than-expected corporate results.
The pan-European STOXX 600 index lost 0.41% and MSCI’s gauge of stocks across the globe shed 0.62%.
Emerging market stocks lost 1.53%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.47% lower, while Japan’s Nikkei rose 0.37%.
A sell-off in U.S. government bonds pushed the benchmark Treasury yield to its highest level since mid-2008 on expectations of continued hawkish policy from the Federal Reserve.
Benchmark 10-year notes last fell 24/32 in price to yield 4.0981%, from 3.998% late on Tuesday.
The 30-year bond last fell 37/32 in price to yield 4.0985%, from 4.021% late on Tuesday.
Hotter-than-expected UK inflation data and looming recession fears weighed on sterling, which helped support the greenback against a basket of world currencies.
The dollar index rose 0.45%, with the euro down 0.64% to $0.9789.
The Japanese yen weakened 0.31% versus the greenback at 149.73 per dollar, while sterling was last trading at $1.1256, down 0.55% on the day.
Crude prices edged higher on tighter supply conditions, such as falling U.S. crude stocks. U.S. crude rose 0.56% to $83.28 per barrel and Brent was last at $90.63, up 0.67% on the day.
Dollar strength weighed on gold, sending prices for the safe-haven metal to a three-week low.
Spot gold dropped 1.1% to $1,633.76 an ounce.
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