Wall Street stocks drift ahead of U.S. inflation data

Before the release of US inflation data later this week, Wall Street stocks were mixed, which may determine the future direction of the central bank’s monetary policy.

The S&P 500, the main stock index on Wall Street, fell 0.3%, while the technology-focused Nasdaq Composite Index rose slightly by 0.2% in afternoon trading.

The Stoxx Europe 600 Index rose 0.2% to close at a high, however, as investors turned Relatively cheap European stocks. The FTSE 100 Index rose 0.1%.

Economists surveyed by Bloomberg predict that US inflation data on Thursday will show that after an unexpectedly strong increase in April, consumer prices in May rose 4.7% from the same month last year. The core inflation rate excluding fluctuating food and energy costs is expected to reach 3.4%, the highest level since 1993. St. Louis Fed Data.

The Fed will meet next week and believes that strong inflation is a temporary effect of the economic reopening after the pandemic closed. However, investors remain vigilant about continued price increases, which may force monetary policy makers to raise interest rates faster than planned. Since March last year, the Fed has purchased US$120 billion in assets every month and kept borrowing costs at historically low levels.

“This year will be a transitional year for monetary policy,” said Gergely Majoros, a member of the European Fund Manager Carmignac’s Investment Committee. He added that after getting used to the strong support of the central bank, “investors will find it difficult to manage this shift.”

US Treasury Secretary Janet Yellen told Bloomberg on Sunday that if President Joe Biden’s trillion-dollar fiscal stimulus measures lead to a small increase in interest rates, it would be “a plus point.”

“For ten years, we have been fighting against too low inflation and too low interest rates,” Yellen said.

Patrick Spencer, vice chairman of stockbroker Baird’s stocks, added that the financial market was “too active for cheap money”, referring to the so-called Emoticons Well received by retail traders and Crazy price fluctuations In cryptocurrency. “We need to quit sugar.”

Theater chain AMC and software group BlackBerry rose more than 13% on Monday, while retailer GameStop rose about 10%.

Carmignac’s Majoros added that stock market investors are also concerned that the company has failed to meet analysts’ bullish earnings expectations.

After the first quarter financial reporting season on both sides of the Atlantic, as the economy reopened and companies benefited from the recovery in demand, forecasters have widely raised their expectations for second-quarter results.

“Analyst optimism is reaching extreme levels,” Liberum strategists Joachim Klement and David Mak commented in a research report.

“We expect the next earnings season to be a reality test for many analysts and investors.”

The yield on the 10-year U.S. Treasury note, which is inversely proportional to the price, rose by 0.01 percentage point to 1.565%. Since the beginning of 2021, yields have climbed from about 0.9% because investors expect rising inflation, which will erode the value of fixed interest payments on bonds.

Brent crude oil fell 0.5% to US$71.53 per barrel after hitting its highest level since May 2019 in Asian trading earlier on Monday.

Currency, after Andrés Manuel López Obrador (Andrés Manuel López Obrador), the Mexican peso rose 0.8% to $19.80 Looks set Losing an absolute majority of two-thirds of the seats in the lower house of the Mexican Congress, he needs to undertake major constitutional reforms, the euro-dollar exchange rate rose 0.3% to 1.2199 US dollars. The pound rose 0.2% to 1.4177 US dollars.

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About the Author: Agnes Zang