(Bloomberg) — U.S. stocks halted the longest rally since 2017, sending major indexes lower from all-time highs as Treasuries surged.
The S&P 500 fell for the first time in nine sessions, led by a drop in financial shares that came under pressure as the 10-year yield slumped to the lowest level in seven weeks. Tesla Inc. sank as much as 13% after a tweet by investor Michael Burry. PayPal Holdings Inc. fell after its guidance disappointed. And General Electric Co. rose after saying it will split into three companies.
Global equities are hovering near all-time highs as investors weigh strong earnings, easing travel curbs and U.S. infrastructure spending against the risk of persistent inflation that may lead to tighter monetary policy. Data Tuesday showed the producer price index accelerated in October, further fueling concerns about inflationary pressures in the economy.
“There’s no denying that pricing pressure looms large,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial. “Though there were no surprises with the PPI read, it could be viewed as somewhat of a disappointment in that inflation hasn’t eased up in the slightest.”
Fresh consumer price data on Wednesday could add to the debate over monetary policy, which saw another wildcard Tuesday with news that Fed Governor Lael Brainard was interviewed by President Joe Biden as he contemplates whether to tap Fed Chair Jerome Powell for a second term or not. Meanwhile, shifts in positioning have fueled gains in long-end Treasuries, taking the 30-year yield down to its lowest level since July. The yield on the U.S. 10-year note fell to 1.44%.
“We are at the point of the cycle where policy is shifting to be somewhat less accommodative,” Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, told Bloomberg TV. “We do think financial conditions ultimately are going to tighten by the middle of next year and investors don’t seem to care. They’re hooked on the IV of very low real interest rates.”
Bitcoin pared back gains after soaring past $68,000 for the first time. Crude oil rose more than 3% in New York after a bearish report. And gold gained.
What to watch this week:
- China’s Communist Party’s decision-making Central Committee meets through Thursday
- China PPI Wednesday
- U.S. wholesale inventories, CPI, initial jobless claims Wednesday
- U.S. bond marked is closed in observance of Veterans Day Thursday
- China holds its annual Singles’ Day, the world’s biggest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure buyers with bargains Thursday
For more market analysis, read our MLIV blog.
Stocks
- The S&P 500 fell 0.3% as of 4 p.m. New York time
- The Nasdaq 100 fell 0.7%
- The Dow Jones Industrial Average fell 0.3%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1596
- The British pound was little changed at $1.3561
- The Japanese yen rose 0.3% to 112.87 per dollar
Bonds
- The yield on 10-year Treasuries declined five basis points to 1.44%
- Germany’s 10-year yield declined five basis points to -0.30%
- Britain’s 10-year yield declined three basis points to 0.82%
Commodities
- West Texas Intermediate crude rose 3% to $84.40 a barrel
- Gold futures rose 0.4% to $1,834.50 an ounce
