Big Tech Pulls Down US Stocks; Dollar Gains: Markets Wrap

(Bloomberg) — U.S. stocks fell as concerns mounted that China could tighten Covid restrictions after a string of reported deaths. Concerns about US growth prospects, as the Federal Reserve promises to be persistent in fighting inflation, also continue to weigh on investors.

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The S&P 500 was dragged by the technology sector. The tech-heavy Nasdaq 100, which tends to be more sensitive to interest rates, was pushed lower by declines in Apple Inc., Tesla Inc. and Amazon.com Inc. Walt Disney Co. it brought back former leader Bob Iger to replace his successor Bob Chapek as CEO.

Crude futures offset the losses after Saudi Arabia denied a report that it is discussing an increase in oil production ahead of next month’s OPEC+ meeting. The dollar gained as investors looked for safe assets. Government bond yields fell.

China saw its first Covid-related death in nearly six months on Saturday and two more were reported on Sunday. Worsening outbreaks across the country are fueling concerns that authorities could once again resort to harsh restrictions. Closures could negatively impact supply chain dynamics and potentially exacerbate inflationary concerns across economies.

The weakening of the offshore yuan against the dollar on Monday is the “biggest negative macro price driver for the S&P 500,” said Charlie McElligott, general manager for cross-asset strategy at Nomura Securities International.

“This newfound dollar strength also contributes to tighter “USD liquidity” while acting as a headwind for US stocks from the S&P 500 to Nasdaq to Russell,” he said.

Read more: Oil Falls on Report Saudi Arabia discusses OPEC hike

Traders will also be looking to the minutes of the Federal Reserve’s most recent policy meeting this week for more clues about the course of interest rate hikes.

“For the Fed right now, if we get a slowdown in inflation – which it looks like we could – but you don’t see it in the slowdown in services inflation, that has to do with a tight labor market,” Veronica Clark , economist at Citigroup said Monday on Bloomberg Television. “You have to see that easing in the labor market figures.”

Raphael Bostic, president of the Atlanta Fed, said he favors slowing the pace of rate hikes, with no more than 1 percentage point increase, to try to give the economy a soft landing. Boston Fed President Susan Collins reiterated her view that options are open for the size of the December rate hike, including the possibility of a 75 basis point step.

Main events this week:

  • US Richmond Fed Manufacturing Index, Tuesday

  • The OECD publishes Economic Outlook on Tuesday

  • Fed’s Loretta Mester and James Bullard speak Tuesday

  • S&P Global PMIs: US, Euro Area, UK, Wednesday

  • US MBA Mortgage Applications, Durable Goods, First Unemployment Claims, University of Michigan Sentiment, New Home Sales, Wednesday

  • Minutes from the Federal Reserve meeting on November 1 and 2, Wednesday

  • The ECB will publish the report of its policy meeting in October on Thursday

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

  • US stock and bond markets close early Friday

Some of the major moves in markets:

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  • The S&P 500 was down 0.5% as of 12:08 a.m. New York time

  • The Nasdaq 100 fell 1%

  • The Dow Jones Industrial Average fell 0.3%

  • The Stoxx Europe 600 had changed little

  • The MSCI World index rose 0.6%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.8%

  • The euro fell 0.9% to $1.0235

  • The British pound fell 0.8% to $1.1789

  • The Japanese yen fell 1.2% to 142.12 per dollar

Cryptocurrencies

  • Bitcoin fell 1.4% to $16,031.02

  • Ether fell 2.5% to $1,113.37

Bonds

  • The 10-year Treasury yield fell two basis points to 3.81%

  • German 10-year yields fell by two basis points to 1.99%

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

Raw materials

  • West Texas Intermediate crude fell 5.1% to $76.03 a barrel

  • Gold futures fell 1.1% to $1,749 an ounce

This story was created with the help of Bloomberg Automation.

–With assistance from Isabelle Lee and John Viljoen.

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