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U.S. stocks rebound after rout, bond yields dip

Stock MarketsMay 13, 2021 05:05PM ET
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2/2 © Reuters. FILE PHOTO: A man works at the Tokyo Stock Exchange after market opens in Tokyo, Japan October 2, 2020. REUTERS/Kim Kyung-Hoon 2/2

By Koh Gui Qing

NEW YORK (Reuters) -U.S. shares rebounded on Thursday after falling for three consecutive days and benchmark Treasury yields dipped, as investors snapped up stocks that would benefit from an economic recovery and shrugged off worries about rising prices, for now.

After posting their biggest slump in at least 11 weeks on Wednesday, U.S. shares bounced back as investors flush with cash looked past concerns that accelerating inflation may prompt interest rate hikes sooner, and deployed their funds once more.

So intent were investors on leaving inflation worries aside that financial markets barely responded to Thursday's data, which showed U.S. producer prices posting their biggest annual gain since 2010 in April.

"It's rebound Thursday," said John Augustine, chief investment officer at Huntington Private Bank, which manages $20 billion in assets. "Given the money on the sidelines, investors are going to be coming back in."

Still, Augustine said investors should redeploy their funds in a measured way as "inflation concerns are not going away".

The Dow Jones Industrial Average ended the day up 1.3%, the S&P 500 rose 1.2% and the Nasdaq Composite gained 0.7%.

Gains were led by shares in small-cap companies, chip makers and transportation providers - businesses that stand to gain as the United States emerges from the pandemic recession. (N)

The bounce in U.S. stocks lifted the MSCI world equity index, which tracks 50 countries, by 0.3%.

Wall Street had tumbled earlier this week after data showed U.S. consumer prices unexpectedly jumped by the most in almost 12 years in April.

Some investors now worry that quickening price pressures could lead the U.S. Federal Reserve to tighten monetary policy sooner than expected, reducing its supply of cheap money that has propelled financial markets higher.

For now, however, inflation woes took a backseat.

Benchmark 10-year Treasury yields, which spiked 7 basis points overnight in the biggest daily rise in two months, fell by nearly 4 basis points to 1.6556% as investors took a breather.

Benchmark two-year Treasury yields also pulled back to 0.1569%. [US/]

Against a basket of major currencies, the dollar was steady at 90.718, largely holding on to gains eked out on Wednesday, when expectations of rate hikes burnished the currency's appeal.

A firm dollar capped gains in the euro, which edged up 0.1% to $1.20805. [USD/]

The pullback in Treasury yields helped gold to recoup some of its previous day's losses, when rising bond yields dampened the allure of non-yielding bullion. Spot gold climbed 0.6% from a one-week low to $1,826.71 per ounce. [GOL/]

A recent rally in oil prices also paused on Thursday as investors turned their attention to the coronavirus crisis in India, and as the top U.S. fuel pipeline network resumed operations. [O/R]

Brent crude slumped 3.4% to $66.98 a barrel, while U.S. West Texas Intermediate crude lost 3.5% to $63.78 a barrel.

Among cryptocurrencies, bitcoin, which tumbled 13% overnight when Elon Musk said Tesla (NASDAQ:TSLA) Inc would stop accepting it as payment because of its high energy use, skidded again on Thursday following reports that the U.S. Justice Department was investigating crypto exchange Binance.

By Thursday evening, bitcoin had dropped 0.7% to $48.965.

U.S. stocks rebound after rout, bond yields dip
 

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Comments (13)
Allatra Yiveh
AllatraYiveh May 13, 2021 10:51AM ET
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"For traders the only place to take refuge was the U.S. dollar." -> taking refuge in USD when inflation is hot is really a BAD idea.
Kelly Mayer
Kelly Mayer May 13, 2021 10:23AM ET
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May selloff. Correction has been going on gradually since the beginning of the year
George Vincent
George Vincent May 13, 2021 9:19AM ET
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Expect a move higher. Thats all folks. Same story for decades
Investing Man
Investing Man May 13, 2021 5:59AM ET
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Peoples fear on here is like food for the investors soul. Please, qqq more.
john dislias
john dislias May 13, 2021 4:04AM ET
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How many times the market decleine due to fear inflation ?? Lol
Amine Fourali
Amine Fourali May 13, 2021 3:22AM ET
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Economy recovering time to raise interest rates...markets went too far ATH in almost all sectors...
Dot Matrix
Dot Matrix May 13, 2021 3:19AM ET
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Japanized US economy. Expect everything high including your bank balance and no growth.
Kaveh Sun
Kaveh Sun May 13, 2021 2:21AM ET
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Biden keeps doing green new deal c/r/a/p. Even he floods the market w money, the market is not sure Biden knows how to run econ. So far Biden looks loss on reality.
Catholic Man
CatholicMan May 13, 2021 1:42AM ET
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biden has had 4 months of riding Trump's coattails, now joe's incompetence is showing.
Benjamin Kang
Benjamin Kang May 13, 2021 1:42AM ET
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you think the money print pump market would work forever with the very stable genius?
Mark Stallone
Mark Stallone May 13, 2021 1:40AM ET
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Relax. It's all part of Building Back "Better".
Sloppy Joe
Sloppy Joe May 13, 2021 12:36AM ET
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fed is to blaim they onky have to lie now
Allatra Yiveh
AllatraYiveh May 13, 2021 12:36AM ET
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FED is the source of all corrupt failing banking and monetary system that we have now.
leehiung chong
leehiung chong May 12, 2021 10:05PM ET
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what would be the possible action by Fed to counter rising inflation? reduce stimulus by 0.001%? ?
Atlantic Coast Money
Atlantic Coast Money May 12, 2021 10:05PM ET
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Raise interest rates.
jngl jedi
spx1800 May 12, 2021 10:05PM ET
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Atlantic Coast Money  even a slowdown of QE will crash. why would they raise rates? Sp500 will be back at 1800 if they did.
Atlantic Coast Money
Atlantic Coast Money May 12, 2021 10:05PM ET
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jngl jedi cannot allow inflation to skyrocket. Low rates encourage borrowing and increase demand and therefore upward pressure on prices. Bond investors will also demand higher rates to compensate for future inflation risks. By increasing rates, they essentially lessen the money supply. Same concept when they require banks to increase reserves.
Mike Chen
Mike Chen May 12, 2021 10:05PM ET
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Fed said transitory only. Relax and enjoy the ride!
Allatra Yiveh
AllatraYiveh May 12, 2021 10:05PM ET
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Atlantic Coast Money  FED wouldn't dare to even think about raising interest rate even if hyperinflation is in the front of their eyes.
Kaihao Jin
Kaihao Jin May 12, 2021 9:19PM ET
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Check A shares then
 
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