Stocks end down, U.S. yields up as investors assess Fed path

© Reuters. FILE PHOTO: A passerby walks past an electric monitor displaying the graph of recent movements on Japanese yen exchange rate against the U.S. dollar in Tokyo, Japan, October 20, 2022. REUTERS/Issei Kato/File Photo

By Chuck Mikolajczak

NEW YORK (Reuters) - A gauge of global stocks ended lower on Monday in choppy trade and U.S. bond yields rose as investors assessed comments from Federal Reserve officials to try and determine the central bank's path of rate hikes.

Equities rallied last week and U.S. Treasury yields tumbled after consumer price data indicated stubbornly high inflation may finally be starting to slow and give the Fed room to dial back its tightening policies, pushing MSCI's gauge of stocks across the globe to its biggest weekly percentage gain in two years.

But on the heels of the equity rally, Federal Reserve Governor Christopher Waller said on Sunday that though the central bank may consider slowing the pace of rate increases at its next meeting, that should not be taken as a "softening" in the fight to bring down inflation, and while the data was "good news" it was "just one data point."

Stocks briefly erased early losses and turned higher, while bond yields moved off earlier highs after Vice Chair Lael Brainard said on Monday the central bank would likely slow its interest rate hikes soon, but emphasized the Fed still had more work to do.

"There is still a sensitivity to Fed speak... One was a little hawkish, one was a little dovish," said Eric Kuby, chief investment officer at North Star Investment Management Corp.

On Wall Street, the S&P 500 fell after recording its biggest weekly percentage gain since June last week, led by declines in real estate and consumer discretionary shares. Amazon.com (NASDAQ:AMZN) fell 2.28% after reports the online retailer is planning to cut around 10,000 jobs in corporate and technology roles.

The Dow Jones Industrial Average fell 211.16 points, or 0.63%, to 33,536.7, while the S&P 500 lost 35.68 points, or 0.89%, to 3,957.25 and the Nasdaq Composite dropped 127.11 points, or 1.12%, to 11,196.22.

The pan-European STOXX 600 index closed up 0.14% and MSCI's gauge of global stocks shed 0.59%.

Investors will get another look at inflation when the U.S. producer price index is released on Tuesday, while a slew of Fed officials are scheduled to speak this week.

Benchmark 10-year notes were up 4.2 basis points to 3.871% from 3.829% late on Thursday. The bond market was closed for the Veterans Day holiday on Friday.

The two-year yield was up 8 basis points at 4.406%, from 4.326%.

In contrast, dovish comments from European Central Bank policymaker Fabio Panetta and Cypriot policymaker Constantinos Herodotou helped send European bond yields lower, although short-dated rates remained near multi-year highs hit recently.

Germany's 2-year government bond yield was up 0.2 basis points at 2.118% from 2.116%, after climbing to 2.252% last week, its highest since 2008.

After its biggest weekly percentage drop since March 2020 last week, the dollar index rose 0.122% as the greenback relinquished earlier gains, with the euro down 0.23% to $1.0328.

U.S.-listed Chinese stocks gained on reports regulators have asked financial institutions to extend more support to stressed property developers amid signs the government may be starting to relax some of its strict COVID-19 policies. E-commerce firm Alibaba (NYSE:BABA).com shares rose 0.79%.

U.S. President Joe Biden met Chinese leader Xi Jinping in person on Monday on the sidelines of the G20 summit, with both stressing the need for a better dialogue between their nations and the two sides establishing a mechanism for more frequent communications.

In cryptocurrencies, bitcoin fell 2.59% to $16,320.60 after falling below $16,000 for the first time since Thursday as investors continue to assess the fallout from last week's collapse of crypto exchange FTX.