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Stocks tread water, safe haven dollar gains on inflation worries

EconomyNov 15, 2021 05:07PM ET
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2/2 © Reuters. FILE PHOTO: A man wearing a protective mask, amid the COVID-19 outbreak, walks past an electronic board displaying Japan's Nikkei index outside a brokerage in Tokyo, Japan, September 21, 2021. REUTERS/Kim Kyung-Hoon 2/2

By Pete Schroeder

WASHINGTON (Reuters) - The dollar climbed to a 16-month high on Monday while U.S. stocks dipped slightly as investors searched for a clearer economic picture.

Persistent concerns that inflation may be rising more sharply and sticking around longer than originally expected weighed on Wall Street, with pessimism weighing on stocks and oil and pushing safe havens like the U.S. dollar upwards.

The Dow Jones Industrial Average fell 0.04%, the S&P 500 ended flat, and the Nasdaq Composite dropped 0.04%.

The MSCI world equity index, which tracks shares in 45 nations, rose 0.08%.

Investors likely will be closely watching fresh data on U.S. retail sales out on Tuesday, after a report out Friday showed consumer sentiment hitting its lowest point in a decade, due in part to inflation.

"Stocks were more or less in a holding pattern today, and after the market finished last week in the red, it could be searching for some direction," said Mike Loewengart, managing director of investment strategy at E*TRADE Financial. "As inflation continues to be the topic du jour, investors likely have their sights set on an update from retailers with earnings and retail sales on deck for some insight into the consumer and how they’re handling pricing pressure."

Rising Treasury yields also helped push equity prices lower, with benchmarks hitting three-week highs as companies rushed to debt markets ahead of the holiday stretch.

The 20-year bond yields rose 5 basis points to 2.04% while 30-year bond yields increased 5 basis points to 2.01%.

Benchmark 10-year yields gained 4 basis points to 1.62% and are up from a one-month low of 1.42% last Tuesday.

Oil prices settled somewhat after hitting a one-week low in earlier trading, ending the day in mixed territory. Crude prices had previously been pushed down by speculation that President Joe Biden's administration could tap the U.S. Strategic Petroleum Reserve.

Brent futures settled down 12 cents, or 0.2%, to $82.05 a barrel while U.S. West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, to $80.88.

DOLLAR LEAPS

Investor concern helped push the U.S. dollar to a 16-month high against major peers Monday, as its safe-haven status proved appealing in uncertain times.

The dollar index, which measures the currency against six peers, hit 95.510 on Monday, its highest since July 2020, and was last up 0.398% at 95.394.

The dollar's surge comes after a surprise report last week showing U.S. inflation on the rise weighed down markets, as investors wondered if the Federal Reserve might be forced to raise rates sooner, and if the U.S. consumer will have to consider higher prices for longer.

"Inflation is being driven by the unusual supply shocks tied to the restart. We expect these imbalances to resolve over the next year, but see inflation as persistent and settling at a higher level than pre-COVID," wrote Blackrock (NYSE:BLK) analysts in an investor note. "Although price rises are broad based, the mix of inflation shows the unusual restart dynamics at play."

Fellow safe-haven gold hit a five-month high earlier in the trading day, but ended up settling a touch lower, ending a seven-session winning streak.

Spot gold prices fell 0.10% to $1,862.24 an ounce.

Graphic: The US dollar index https://fingfx.thomsonreuters.com/gfx/mkt/klvykdmrrvg/USD1511.PNG

Stocks tread water, safe haven dollar gains on inflation worries
 

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Comments (8)
Sam Smith
Sam Smith Nov 15, 2021 5:46PM ET
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safe heaven...US dollar. Are you freaking kidding me? a pennystock offers more intrinsic value than a dollar printed in 2021
Ac Tektrader
Ac Tektrader Nov 15, 2021 5:46PM ET
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Sam Smith ..apparently people with a lot more "cents" than you. The dollar is going a lot higher.
Empire Destroyer
Empire Destroyer Nov 15, 2021 5:46PM ET
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Ac Tektrader yes and stocks go higher too. They buy USD, hedging with longs on indices 🤣
Aboy cherry Mae
Aboy cherry Mae Nov 15, 2021 5:46PM ET
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sam smith apparently people with a lot more cent that you plzz
James Johannsen
James Johannsen Nov 15, 2021 2:51PM ET
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anyone still in dollars is on some good stuff buy physical silver before the boom
Darryl Allen
Darryl Allen Nov 15, 2021 11:26AM ET
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Reuters using a negative chart for their thumbnail on optimistic news tells you all you need to know about their reporting. They apparently don't know green is negative on Asian charts.
Ac Tektrader
Ac Tektrader Nov 15, 2021 11:26AM ET
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who cares....
Darryl Allen
Darryl Allen Nov 15, 2021 11:26AM ET
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Ac Tektrader  I think attention to detail matters when you're talking about investing.
Fong SH
Fong SH Nov 15, 2021 3:23AM ET
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This was missed out by lots of investors & analysts - everyone is talking about China's weak economy, unsustainable even with the best results, both retail sales & industrial outputs beat forecasts but markets still choose to be negative about China's economy. Well, nobody is interested that the RMB had gain grounds for the past 6 months or so, strengthening. China is slowly building up her reserves for future plans, take a look at China's gold reserves, although it is not that big as the US & some major economies, but comparing with Asia, for the last few years China had been shoring up her gold reserves. Now standing at slight above 1940 tonnes valued at  Monthly Dec 1977 – Sept 2021 in USD Million USD 109,175.000 Sep 2021 / 113,689.000 Aug 2021 / 425.000 Feb 1985 / 123,088.000 Jul 2020
DJ Car
DJ Car Nov 14, 2021 9:48PM ET
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The Biden disaster continues.
Matt Brackley
Matt Brackley Nov 14, 2021 9:42PM ET
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China industrial production growth slowing by 50% to the same time last year....lol game over. Evergrande default bomb by Wednesday.
Casino Crypt
CasinoCrypt Nov 14, 2021 8:48PM ET
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Japanese data was kind of dire. But bad data doesn't mean anything now because Investors are always looking through and beyond ....
Lesko Brandon
Lesko Brandon Nov 14, 2021 7:35PM ET
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In real news, inflation at highest level in 31 years, 5th Circuit rules 3-0 against lawfulness of Biden's vaccine mandate, highest GOP polling for generic Congressional vote in 40 years (since creation of the poll by ABC). Biden's approval continues to plummet, even after passage of infrastructure bill, which has upset both people on left and right. Biden has seen greatest 1 month drop in approval since creation of gallop poll. Kamala continues to have  lowest approval of any VP in modern history. Inflation out of control, vaccine failure, supply shortages, Afghan failure...while also pushing straight up fascism, collusion of govt with social media to censor/silence political opponents, trying to expand supreme court, eliminate voter ID, end filibuster. Supreme Court declared eviction moratorium unconstitutional, vaccine mandates ruled unlawful by the 5th circuit, faming subsidies based on race ruled unlawful. Left-wing narrative falling apart. Best of luck in midterms and 2024 dems!
Rodney Dangerfield
Rodney Dangerfield Nov 14, 2021 7:35PM ET
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If only both sides wasn't owned by the same people that would matter lol
James Johannsen
James Johannsen Nov 14, 2021 7:35PM ET
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that's right. left right paradigm lie two wings of the same bird
Will Stewart
Will Stewart Nov 14, 2021 7:35PM ET
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You're right.This guy's got his tin foil hat on Tighter than anyone in American History. Anti-vax hookey Nutjob.
Will Stewart
Will Stewart Nov 14, 2021 7:35PM ET
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He keeps talking about Biden's falling approval rate... but, doesn't Mention One Word about the Fact that trump had Negative approval rate the Whole entire time he was president. And, That he lost the Popular Vote, twice
Will Stewart
Will Stewart Nov 14, 2021 7:35PM ET
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He Also doesn't Mention, while he's bashing Kamala Harris, that her Approval Rating is Significantly- higher than Kevin McCarthy, Donald Trump, or, Especially, mitch Mcconnell.
 
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