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U.S. stocks retreat from record high, dollar near 10-week low

EconomyMay 10, 2021 05:41PM ET
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2/2 © Reuters. FILE PHOTO: A passerby wearing a protective mask is silhouetted in front of a screen of blank prices on a stock quotation board after Tokyo Stock Exchange temporarily suspended all trading due to system problems, amid the coronavirus disease (COVID-19) pa 2/2

By Koh Gui Qing

NEW YORK (Reuters) -U.S. stocks fell on Monday and the Dow Jones Industrial Average snapped back from a record high, as worries about accelerating inflation dragged on shares and hobbled the dollar, which struggled at a 10-week low.

U.S. equities' losses deepened as the breakeven rates for U.S. Treasury Inflation-Protected Securities, or TIPS, scaled multi-year highs, underscoring rising inflation expectations.

The Dow Jones Industrial Average lost 0.1% after rising to a record 35,091.56 points earlier in the day. The S&P 500 extended losses to 1%, and the Nasdaq Composite fell 2.55%. (N)

The stocks pullback was mirrored by a broad retreat in riskier assets such as oil and copper, as some investors grew nervous after recent hefty gains.

Indeed, copper prices had also shot to an all-time high earlier on Monday as investors piled in on bets of improved demand amid a tightening supply, and driven by the fear that they were missing out on a price rally. [MET/L]

Some analysts warned that investor bets on mounting inflation pressure and ensuing interest rate hikes by the Federal Reserve could be overdone.

"We see a high bar for the Fed to change its policy stance," Jean Boivin, head of BlackRock (NYSE:BLK) Investment Institute, said, noting a "disconnect" between the market's pricing for rates to rise as early as next year, and the Fed's rate projection.

For now, Monday's jump in the breakeven rate for TIPS was the focus of some investors.

Speculation that growing price pressure would erode the dollar's value kept the U.S. currency near a 2-1/2-month low. By late Monday, the dollar index, which measures the greenback against six major currencies, had pared losses to stand at 90.302. [USD/]

A sluggish dollar helped sterling rally to $1.416, the highest since Feb. 25, despite Scotland's leader saying another referendum on independence was inevitable after her party's resounding election victory.

Rising inflation expectations lifted longer-dated U.S. Treasury yields. The yield on benchmark 10-year Treasury notes stood at 1.6038% after plunging to a two-month low of 1.469% on Friday.

Five-year TIPS rose to 2.72%, its highest since April 2011, following Friday's 2.681%.

The 10-year TIPS breakeven rate also rebounded after closing at 2.503% on Friday. It was last at 2.54%, its highest since April 2013, indicating the market sees inflation averaging 2.5% a year for the next decade.

Oil prices gave up earlier gains as concerns that rising COVID-19 cases in Asia will dampen demand outweighed expectations that a major U.S. fuel pipeline could restart within the week following a cyber attack. [O/R]

Brent crude was little changed at $68.31 per barrel and U.S. crude was also largely flat at $64.91 a barrel.

A weaker dollar also helped to boost gold prices. Spot gold rose 0.3% to $1,835.44 per ounce, after touching its highest since Feb. 11 at $1,845.06. [GOL/]

The focus now shifts to U.S. consumer price data due on Wednesday, which will help investors determine whether to scale back inflation expectations even further.

In the cryptocurrency market, ether pared earlier gains to trade under $4,000. Bigger rival bitcoin fell 4.6 % to $55,667.

U.S. stocks retreat from record high, dollar near 10-week low
 

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Comments (17)
Jon Hayes
Jon Hayes May 10, 2021 6:57AM ET
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Yada yada be quiet comments
Dave Jones
Dave Jones May 10, 2021 6:23AM ET
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hurray! low interest rates because the economy is smoked!!!
Έλενα Αλβέρτη
Έλενα Αλβέρτη May 10, 2021 5:37AM ET
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Really, everyone has seen markets spiking back at the start of the year and the experienced ones very easily predicted a drop after. Stock prices in mid-small cap market will continue to drop until July at least.  I put my cash in TEDU for that reason at $3, it went recently private at $4, I sold at $3.84.  Now I bought SECO, it will do the same no markets will do. It trades at $2.50, the go private offer is at $3.27, I will sell it until June 10th around $3.15. Another secured +25%.
Ominous Owl
Ominous Owl May 10, 2021 2:33AM ET
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April job payroll data comes disappointing when the tapering talks are creating unease. Infrastructure begins to crumble when the Infrastructure package case is being prepared. I am sure I am overthinking - its just a coincidence.
Ominous Owl
Ominous Owl May 10, 2021 2:30AM ET
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Now, the infrastructure is getting hacked when the infrastructure package is being pleaded. The Job data comes sucking whenever the tapering talks are at their highest & again the Biden's family plan is being pushed again for the same. I am sure that's just a coincidence & I am overstretching.
Joel Schwartz
Joel Schwartz May 10, 2021 1:56AM ET
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Raise the rates Powell. This game is sickening.
Adam Paine
Adam Paine May 10, 2021 1:52AM ET
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markets are down but keep feeding the BS
Sloppy Joe
Sloppy Joe May 10, 2021 1:23AM ET
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low rates hope lol
Adam Paine
Adam Paine May 10, 2021 1:23AM ET
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low bond yeilds mean big money is moving away from riskier assets. we celebrate low bond yields for all the wrong reasons
Adam Paine
Adam Paine May 10, 2021 1:00AM ET
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let's see those covid #'s China. you haven't reported since Feb...
hit man
hit man May 10, 2021 12:59AM ET
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good people fool article again 🤣🤣🤣
divad mocihc
9divaD May 10, 2021 12:56AM ET
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Utopia for some
perplexed76 .
perplexed76 . May 10, 2021 12:48AM ET
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India stop consuming oil so one of world oil pumps attacked the pipe. Who can it be...
Dave Jones
Dave Jones May 09, 2021 11:01PM ET
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welcome to dystopia
Antique Purveyor
Antique Purveyor May 09, 2021 10:49PM ET
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when unemployment benefits end, people will go back to work. Plenty of work out there, plenty of business, people just need a reason to work
Adam Paine
Adam Paine May 09, 2021 10:49PM ET
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except they're not paying Moreland inflation makes their money go way less further....sad
Larry DeAngelis
Larry DeAngelis May 09, 2021 10:36PM ET
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You could have taken the last year off and just used that headline every day. Garbage!
justin namon
justin namon May 09, 2021 9:07PM ET
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So we’re just going to play it cool while infrastructure is getting hacked…..
Javier Escamilla
Javier Escamilla May 09, 2021 8:20PM ET
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Which means stocks and oil down tomorrow for some “unexpected” reason
Don Getty
Don Getty May 09, 2021 8:20PM ET
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profit taking
 
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