Wall Street Close: Bulls step back on reflation woes
|- US equity benchmarks post mild losses near record tops.
- Strong US CPI, downbeat bond auction weigh on stocks ahead of Fed’s Powell.
- JPM, Goldman fail to cheer upbeat results but Pepsi benefits from strong earnings.
- Citigroup, Wells Fargo and BofA up for publishing results on Wednesday.
US equity buyers ease controls on Tuesday after strong US inflation data and poor bond auction joined the coronavirus (COVID-19) woes to weigh on the market’s sentiment.
Read: Forex Today: Dollar strengthens on soaring inflation
US Consumer Price Index (CPI) rose past 4.9% expected to 5.4% YoY while the core reading was also upwardly revised from 3.8% to 4.5%, propelling the reflation woes. Additionally, surprisingly tepid demand for a 30-year bond auction also weighed on the market’s mood. As a result, the US 10-year Treasury yield rose 5.5 basis points (bps) to 1.418%, putting a safe-haven bid under the US dollar index (DXY) to jump the most in a month.
Other than the reflation fears and bond auctions, the coronavirus (COVID-19) also weighed on the investors’ mood. The recent jump in covid variants in the Northern Hemisphere probes the economic transition from the pandemic.
The traders’ rush to risk-safety triggered a pullback in equities. That said, Dow Jones Industrial Average (DJI) dropped 0.31% or 107.39 points to 34,888.79. Further, Nasdaq and S&P 500 both stepped back from record tops, losing 55.6 and 15.42 points, or 0.38% or 0.35% in that order, while closing around 14,677.70 and 4,370 respectively.
Stock-specific details suggest JP Morgan Chase and Goldman Sachs losing above 1.0% despite beating market consensus for Q2 revenues. On the contrary, Pepsi gained over 2.0% on upwardly revised full-year economic forecasts.
Moving on, global traders may keep watching the risk catalyst and place their eyes on Fed Chairman Jerome Powell’s testimony on the Semi-Annual Monetary Policy Report before the House Financial Services Committee.
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