Nasdaq 100 Cuts Losses By Half As Bond Yields Drop: Markets Wrap

(Bloomberg) -- Stocks pushed away from from session lows amid a decline in bond yields, with traders gearing up for inflation data that will help shape the outlook for the Federal Reserve’s next steps.

The tech-heavy Nasdaq 100 trimmed by more than half a decline that topped 1%. The S&P 500 posted a small loss. Treasury 10-year yields hovered near 4% after a $38 billion auction. 

Even if inflation overshoots expectations, the Fed will likely feel its policy is restrictive enough as manufacturing struggles and the jobs market shows signs of softening, according to Fawad Razaqzada, a market analyst at City Index and Forex.com. That means a “small beat” wouldn’t matter too much, he noted.

“A goldilocks outlook in the US is what stock market investors on Wall Street have been enjoying this year – until the recent weakness,” Razaqzada added. “They will be looking for signs that the health and sentiment of the consumer remains positive, enough not increase the risks of a further Fed rate increase, and yet not too depressing to raise recession alarm bells. Somewhere in between could support stocks.”

“Risk-on” expectations for consumer price index have cooled relative to the last couple of reports, according to a survey conducted by 22V Research. Investors aren’t “risk-off,” but are more ambivalent following a string of good releases. The strong wage data from Friday’s employment data has likely gotten attention, the firm noted.

Elsewhere, the Bank of Russia announced it will halt purchases of foreign currency on the domestic market for the rest of 2023 in an effort to help the ruble as the currency slumped toward 100 per dollar, its weakest in 16 months.

Corporate Highlights:

• Roblox Corp. fell after reporting that people were spending less time playing its games in the second quarter and missing Wall Street’s estimates.
• Lyft Inc. retreated after the company reported its slowest revenue growth in two years, overshadowing a better-than-expected outlook for earnings, as the company struggles to get its ridership back on track.
• Rivian Automotive Inc. dropped as it expects heavy losses to continue as it boosts production plans for the year and works to reestablish itself as a rising player in the increasingly crowded electric-vehicle market.
• WeWork Inc. declined after saying there’s “substantial doubt” about its ability to continue operating. The company cited sustained losses and canceled memberships to its office spaces.
• Penn Entertainment Inc. rose after Walt Disney Co.’s ESPN has signed a long-term exclusive agreement with the casino operator, licensing its brand for sports betting and deepening the media giant’s ties to the growing online gambling business.
  • DraftKings Inc. and Flutter Entertainment Plc fell on concern the deal will increase competition in the sport-betting industry.

Key events this week:

• China CPI, PPI, money supply, new yuan loans and aggregate financing, Wednesday
• India rate decision, Thursday
• US initial jobless claims, CPI, Thursday
• Atlanta Fed President Raphael Bostic pre-recorded remarks for employment webinar, Thursday
• UK industrial production, GDP, Friday
• US University of Michigan consumer sentiment, PPI, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.3% as of 1:40 p.m. New York time
• The Nasdaq 100 fell 0.6%
• The Dow Jones Industrial Average fell 0.1%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.0978
• The British pound fell 0.2% to $1.2728
• The Japanese yen fell 0.2% to 143.67 per dollar

Cryptocurrencies

• Bitcoin fell 1.7% to $29,487.02
• Ether fell 0.8% to $1,848.93

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.00%
• Germany’s 10-year yield advanced three basis points to 2.50%
• Britain’s 10-year yield declined two basis points to 4.36%

Commodities

• West Texas Intermediate crude rose 0.8% to $83.56 a barrel
• Gold futures fell 0.5% to $1,949.90 an ounce

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Brett Miller, Richard Henderson and Cecile Gutscher.

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