(Bloomberg) — US stocks dropped amid concerns about the growth outlook in the US as the Federal Reserve vows to be persistent to fight inflation. Investors are also seeking shelter in the dollar as worries mount that China may tighten Covid curbs after a string of reported deaths.
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The S&P 500 was dragged by technology and energy sectors. The Nasdaq 100 also declined. Oil sank on concern of a weakening demand outlook from China and on news that Saudi Arabia is considering an Opec+ increase of up to 500,000 barrels a day.
The dollar climbed against its Group-of-10 counterparts and emerging-market currencies. Treasuries rose.
China saw its first Covid-related death in almost six months on Saturday and another two were reported on Sunday. Worsening outbreaks across the nation are stoking concerns that authorities may again resort to harsh restrictions.
The offshore yuan weakening against the dollar on Monday is the “largest negative macro factor price driver for the S&P 500,” said Charlie McElligott, managing director for cross-asset strategy at Nomura Securities International.
“This renewed dollar strength is also contributing to tighter “USD liquidity” and simultaneously acting as a headwind for US Stocks from the S&P 500 to Nasdaq to Russell,” he said.
Traders this week will also be looking to minutes of the most recent Federal Reserve policy meeting for more clues on the course of rate hikes.
“That November Fed meeting feels like a long time ago, but it could be an opportunity to somewhat hawkishly push back on markets,” Veronica Clark, economist at Citigroup, said Monday on Bloomberg Television. “For the Fed right now, if we do get some slowing in inflation — which it seems like we might — but you’re not seeing it in the slowing of service inflation, that’s related to a tight labor market. You do need to see that loosening in the labor market data.”
Atlanta Fed President Raphael Bostic said he favors slowing the pace of interest rate increases, with no more than 1 percentage point more of hikes, to try to ensure the economy has a soft landing. Boston Fed President Susan Collins reiterated her view that options are open for the size of the December interest-rate increase, including the possibility of a 75 basis-point move.
Key events this week:
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US Richmond Fed manufacturing index, Tuesday
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OECD releases Economic Outlook, Tuesday
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Fed’s Loretta Mester and James Bullard speak, Tuesday
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S&P Global PMIs: US, Euro area, UK, Wednesday
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US MBA mortgage applications, durable goods, initial jobless claims, University of Michigan sentiment, new home sales, Wednesday
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Minutes of the Federal Reserve’s Nov. 1-2 meeting, Wednesday
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ECB publishes account of its October policy meeting, Thursday
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US stock and bond markets are closed for the Thanksgiving holiday, Thursday
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US stock and bond markets close early, Friday
Some of the main moves in markets :
Stocks
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The S&P 500 fell 0.4% as of 10:20 a.m. New York time
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The Nasdaq 100 fell 0.7%
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The Dow Jones Industrial Average fell 0.1%
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The Stoxx Europe 600 rose 0.1%
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The MSCI World index rose 0.6%
Currencies
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The Bloomberg Dollar Spot Index rose 0.6%
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The euro fell 0.7% to $1.0254
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The British pound fell 0.7% to $1.1810
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The Japanese yen fell 0.9% to 141.69 per dollar
Cryptocurrencies
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Bitcoin fell 0.8% to $16,129.2
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Ether fell 0.8% to $1,131.87
Bonds
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The yield on 10-year Treasuries declined two basis points to 3.81%
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Germany’s 10-year yield declined two basis points to 1.99%
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Britain’s 10-year yield declined three basis points to 3.20%
Commodities
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West Texas Intermediate crude fell 4.6% to $76.41 a barrel
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Gold futures fell 0.8% to $1,754.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Peyton Forte and Isabelle Lee.
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