Sunday, July 14, 2024

Stocks open higher; bond yields rise after inflation jumps

by Associated Press

Stocks are opening higher on Wall Street Thursday, nudging the S&P 500 back into the green for the week. The benchmark index was up 0.6% in the early going, and the tech-heavy Nasdaq was up 0.4%. Treasury yields rose after the government reported that consumer prices jumped 5% in May over a year ago, the biggest 12-month spike since 2008. That was more than economists had expected. As the economy emerges from its pandemic-induced recession, investors are trying to determine whether inflationary pressures will be transitory or longer-lasting. The yield on the 10-year Treasury note rose to 1.51%.

Global markets were mixed on Thursday as investors awaited key U.S. inflation data and a gathering of the leaders of the Group of Seven major economies.

Benchmarks fell in Paris and Frankfurt but rose in Tokyo and Shanghai. U.S. futures were little changed.

Trading stayed in a relatively narrow range ahead of the release of U.S. inflation data later Thursday. Oil prices were flat, while the yield on the 10-year Treasury note was steady at 1.50%.

“There’s a sense of every man for himself ahead of the U.S. inflation data this evening, a data point that has left markets in limbo and seems to be taking an interminably long time to arrive,” Jeffrey Halley of Oanda said in a report.

The European Central Bank was expected to leave its stimulus efforts running at full steam at a policy setting meeting Thursday — even as the economy shows signs of recovery thanks to the easing of pandemic restrictions.

Markets are also watching for developments from a summit of the Group of Seven in Britain. At the top of the leaders’ agenda is helping countries recover from the coronavirus pandemic, which has killed more than 3.7 million people and wrecked economies.

The G-7 leaders are meeting for three days at a British seaside resort. It’s the first such gathering since before the pandemic.

Relations with China are another key concern, as Beijing and Washington remain at odds over trade and technology policies heading into the fourth year of a tariff war.

The Labor Department’s release of the consumer price index comes shortly before a meeting next week of the Federal Reserve’s Open Market Committee, which sets policy on interest rates and other measures.

Investors are focusing on how U.S. inflation data might impact ultra-low interest rates and other market-supporting policies. Recent price increases have raised worries that price hikes might not be temporary and might prompt the Federal Reserve to raise interest rates.

But so far officials have said inflation is likely elevated because prices plunged during the downturn due to the pandemic early last year. They expect that “base effect” to ease in coming months.

Germany’s DAX edged 0.1% lower to 15,564.78 while the CAC 40 in Paris lost 0.2% to 6,550.87. In Britain, the FTSE 100 picked up 0.3% to 7,099.18. U.S. futures were little changed, with the contract for the Dow industrials up 0.1% and that for the S&P 500 barely changed.

In Asian trading, Tokyo’s Nikkei 225 rose 0.3% to 28,958.56 and the Kospi in South Korea picked up 0.3% to 3,224.64. In Hong Kong, the Hang Seng shed less than 4 points to 28,738.88, while the Shanghai Composite index advanced 0.5% to 3,610.86. Australia’s S&P/ASX 200 gained 0.4% to 7,302.50.

On Wednesday, a slide in banks and industrial companies nudged stocks on Wall Street to modest losses after an early gain faded in the last half-hour of trading. Stocks championed by hordes of online retail investors, the “meme” stocks as they have become known, were volatile once again.

The S&P 500 slipped 0.2% to 4,219.55. The Dow Jones Industrial Average gave up 0.4% to 34,447.14, while the Nasdaq held up somewhat better, ending down just 0.1% at 13,911.75. The Russell 2000 index gave up 0.7% to 2,327.13.

In other trading, U.S. benchmark crude lost 2 cents to $69.94 per barrel in electronic trading on the New York Mercantile Exchange. It lost 9 cents to $69.96 per barrel on Wednesday.

Brent crude, the international standard, picked up 4 cents to $72.26 per barrel.

The U.S. dollar was trading at 109.47 Japanese yen, down from 109.64 late Wednesday. The euro weakened to $1.2169 from $1.2182.

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