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Wall Street retreats from records, U.S. Treasury yields rise

EconomyNov 22, 2021 04:51PM ET
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2/2 © Reuters. FILE PHOTO: A man wearing a protective face mask, following an outbreak of the coronavirus, talks on his mobile phone in front of a screen showing the Nikkei index outside a brokerage in Tokyo, Japan, February 26, 2020. REUTERS/Athit Perawongmetha/File Ph 2/2

By Chris Prentice and Saikat Chatterjee

WASHINGTON/LONDON (Reuters) - Wall Street retreated from record highs on Monday, and shares of lenders rallied as two-year U.S. Treasury yields rose after President Joe Biden tapped Jerome Powell to continue as Federal Reserve chair.

European shares were flat, under pressure from fears of a resurgent coronavirus pandemic.

The S&P 500 and Nasdaq Composite touched all-time highs before ending lower. The S&P 500 lost 0.32% to end at 4,682.88 points, while the Nasdaq Composite finished down 1.26%, at 15,854.76 amid losses in technology stocks.

The Dow Jones Industrial Average rose 17.28 points, or 0.05%, to 35,617.83.

Biden nominated Powell as chair and Lael Brainard, the other top candidate for the job, as vice chair. Powell's current term has proven positive for risk assets, with the S&P gaining 69.7% since his appointment.

The S&P 500 banks index gained.

"The nominations signal continuity for policy at a critical time for the economy," said Arthur Hogan, chief market strategist at National Securities in New York.

The U.S. dollar rose 0.52% against a basket of other major currencies.

The pan-European STOXX 600 index finished flat after falling earlier in the day when German Chancellor Angela Merkel said Europe's biggest economy needed tighter restrictions to control a wave of COVID-19 inflections. MSCI gauge of European shares fell 0.6% as traders weighed the likely impact of fresh European COVID-19 restrictions on economic prospects.

Europe's "growth potential is being derailed by COVID right now. You're seeing flows back to the United States as a result," said Edward Moya, senior market analyst at brokerage OANDA.

French health authorities reported 5,266 daily new COVID-19 infections, pushing the seven-day moving average of new cases to an almost three-month high.

Austria powered down public life as its fourth national COVID-19 lockdown began.

High frequency data has already shown the European economy struggling to gain traction relative to its U.S. counterpart.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.11%.

The euro fell 0.57% and touched the lowest in more than 16 months. The common currency has been the prime mover in markets over recent sessions as investors bet Europe's economy will lag the U.S. recovery.

U.S. Treasury yields rose, with the two-year yield, which typically moves in step with interest rate expectations, hitting its highest level since early March 2020.

Fed Vice Chair Richard Clarida said last week that quickening the pace of tapering might be worth discussing at December's meeting. Minutes of the Fed's November meeting are due for release on Wednesday.

In commodities, gold prices were under pressure as Powell's nomination drove expectations that the central bank will stay the course on tapering economic support. Spot prices were down 2.16% by 4:23 EST (2124 GMT) and U.S. gold futures settled 2.4% lower at $1,806.30.

Oil prices rebounded from recent losses on reports that OPEC+ could adjust plans to raise oil production if large consuming countries release crude from their reserves or if the coronavirus pandemic dampens demand.

Brent crude settled up 1.03% at $79.70 a barrel and U.S. crude finished up 1.07% to $76.75 per barrel.

"The Biden administration is serious about tackling inflation and we’re not going to have runaway inflation kill the U.S. economy," OANDA's Moya said, citing the expected tapping of strategic petroleum reserves.

Bitcoin dropped 4.5%, extending its rout after posting its worst week in two months last week.

Wall Street retreats from records, U.S. Treasury yields rise
 

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Comments (4)
Dave Jones
Dave Jones Nov 22, 2021 1:00AM ET
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more lockdowns. more stimulus. more aths!
Jack Zydron
Jack Zydron Nov 22, 2021 12:23AM ET
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heads of governments have already post-covid meetings. covid is over.
Jacob Steinschlag
Jacob Steinschlag Nov 22, 2021 12:23AM ET
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Keep telling that to yourself while people around me are dying
dee money
dee money Nov 22, 2021 12:23AM ET
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Jacob Steinschlag weak immune systems will do that.
Options Trader
Options Trader Nov 22, 2021 12:16AM ET
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Does anyone care anymore about cases? Notice they never mention deaths? Because they are flat. With the medicines we have now to treat, nobody should be dying. This is all a play for the mid terms and mail in ballots. If you believe the government cares about you, then i cannot help you.
Koketso Tendane
Koketso Tendane Nov 21, 2021 11:56PM ET
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Protests in Europe over mandatory vaccine passports!! People are standing up for this nonsense Covid.
 
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