Wall Street Close: Bears tighten grips over economic fears, pre-ECB caution

US shares posted losses as doubts over economic transition joined pre-ECB fears.
Dow Jones, S&P 500 print three-day downtrend, Nasdaq drops 0.57%.
Fedspeak promoted tapering, JOLTs Job Openings and Beige Book did that too.
Perrigo jumped more than 9.0%, Coinbase dropped over 3.00%.

Anil Panchal FXStreet

US equities end Wednesday on a weaker note as pessimism surrounding economic transitions from the pandemic dominates amid chatters over tapering. Also contributing to the risk-off mood were downbeat comments from the Fed policymakers and pre-ECB caution.

Read: Forex Today: Central bankers facing the tapering challenge

Dow Jones Industrial Average (DJI) dropped 0.20% or 68.93 points whereas S&P 500 fell 5.96 points or 0.13%, both down for the third day. Further, Nasdaq leads the bearish impulse with 0.57% daily loss, or 87.7 points, to 15,286.60.

Signals concerning further prices hikes and strong jobs market, as recently hinted by the Fed Beige Book and JOLTS Job Openings, joined the coronavirus woes to fade the post-Jackson Hole optimism. St. Louis Fed Bank President James Bullard and New York Fed Bank President John Williams backed tapering in 2021 whereas Dallas Federal Reserve Bank President Robert Kaplan makes the case for an October taper despite cutting on Q3 GDP due to covid.

It should be noted that the doubts over US President Joe Biden’s six-pronged strategy, up for publishing on Thursday, joins the US Diplomat’s mixed view on Jerome Powell’s reappointment as the Fed Chairman to weigh on the sentiment. Additionally, signals from Republicans and some of the Democratic Party members to offer a bumpy road to the US stimulus also spoiled the mood.

Amid these plays, the US 10-year Treasury yields dropped 3.5 basis points (bps) to 1.336%.

Stock-specific chatters highlight Perrigo after its announcement to buy Hera SAS propelled the shares by 9.0% daily. On the other hand was PulteGroup that dropped over 6.0% to lead the losers on the S&P 500 despite conveying optimism for Q3. Furthermore, Coinbase dropped over 3.0% amid talks over a warning from the US Securities and Exchange Commission.

That said, global markets reach a bumper ECB day and hence trade moves may remain silent ahead of the event but any surprises will be welcomed with zeal.

Read: European Central Bank Preview: Taper on the table, but don’t get too excited about it

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

GBP/USD ranges below 1.3450 amid US-Iran uncertainty, ahead of US data

GBP/USD keeps its range below 1.3450 in the European session on Tuesday. Uncertainty surrounding US-Iran talks drives traders toward a safe-haven currency such as the US Dollar, while undermining the risk-sensitive British Pound. All eyes remain on the US JOLTS data and Mideast headlines.

EUR/USD flatlines above 1.1500, awaits US jobs data

EUR/USD holds steady around 1.1505 in European trading hours on Tuesday. Markets remain cautious ahead of a slew of US jobs data, starting with the JOLTS Job Openings Survey later today. However, the downside appears capped by hot Eurozone inflation in July, bolstering the case for a European Central Bank rate hike at the next meeting.

Gold consolidates above $4,050 amid Fed hike bets and Iran uncertainty

Gold seesaws between tepid gains and minor losses during the Asian session as traders seem hesitant and opt to wait for further developments surrounding the Middle East crisis. The US Dollar struggles to build on the previous day's solid bounce from the lowest level since Mid-June and acts as a tailwind for the bullion. However, the uncertainty over US-Iran peace talks helps limit the downside for the buck.

Ripple and Stellar steady as derivatives data points to easing downside pressure

Ripple and Stellar show mixed price action, with XRP holding above the key $1 support zone while XLM faces rejection at $0.173. Meanwhile, improving derivatives metrics alongside fading bearish momentum suggest that the downside pressure may be easing for both altcoins. Derivatives data shows mild bullish sentiment among traders.

US JOLTs report in focus

In the US, the June JOLTs report will be in the spotlight. Job openings have increased modestly this year, which has historically predicted rising wage cost pressures ahead. June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.