The Federal Reserve’s “bailout” lasted only half a day. On Thursday, the market’s Inflation concerns reignited, the U.S. bond sell-off intensified again, the U.S. stock divergence stands out, technology stocks continue to drag the broader market down, bank stocks in the income side of the yield upside stimulated by the collective surge, the three major U.S. stock index only the Dow was higher intraday.
Along with climbing U.S. bond yields, the dollar index rebounded and Crude Oil fell to a two-week low, falling at least 5% intraday. Some market views suggest that the plunge in crude oil also reflects concerns about inflation.
Cryptocurrencies were higher across the board for a second straight day after Morgan Stanley became the first major U.S. bank to offer a bitcoin fund, and bitcoin had rebounded to $60,000 during the U.S. session, approaching the all-Time high set last weekend when it rose above $61,000.
Dow hits another record high, bank stocks soar, tech stocks lead declines
Although the three major U.S. stock indexes collectively opened lower, but the performance varied during the session, the Dow Jones Industrial Average, which opened down nearly 90 points, opened lower and higher at the beginning of the session that turned higher, rising more than 210 points during the day when it hit a new intraday high, up more than 0.6%. The S&P 500 index fell nearly 0.8% at the beginning of the session when it set a new daily low, and has since narrowed most of its losses, falling about 0.2% when the Dow hit a new high. The Nasdaq Composite Index fell more than 1.8% in early trading to a new daily low, and the Dow was still down more than 1% at its new high.
S&P 500 of the 11 major sectors, only four early gains, the financial sector rose more than 2% ahead of the industrial sector rose more than 1%, health care and materials rose between 0.6% and 0.8%; falling sectors, down more than 1% of the energy and information technology led the decline, showing the declining energy stocks and crude oil.
Technology stocks fell in general, leading technology stocks and chip stocks fell across the board, FAANMG six major technology stocks, Apple and Nifty fell more than 2%, Microsoft, Google parent company Alphabet fell more than 1%; tesla fell more than 4%.
A sharp contrast in the banking stocks, Bank of America rose more than 5%, Deutsche Bank and the Dow component JP Morgan Chase rose more than 4%, another index component Goldman Sachs rose more than 2%, the banking ETF rose nearly 4%.
Long-term U.S. bond yields hit a new high of more than a year
After a brief pullback after Wednesday’s Federal Reserve meeting, U.S. long-dated bond yields hit a new more than one-year high again.
Thursday in the European stock market, the 10-year U.S. bond yield broke through 1.70% for the first time since January last year, U.S. stocks once rose above 1.75% in the pre-market, since the second day in a row to hit a new intraday high of 14 months, an intra-day rise of more than 11 basis points, U.S. stocks fell back below 1.74% in early trading, still firmly above 1.70%. 30-year U.S. bond yields had risen above 2.5% in the European stock market, August 2019 It broke above that mark for the first time since August, rising as high as above 2.51%, up about 8 basis points during the day, before U.S. stocks opened back below 2.50%.
The Federal Reserve held its meeting this week and reiterated its accommodative stance, with Fed Chairman Jerome Powell hinting that he was not concerned about the recent rise in U.S. bond yields. Some commentators said Powell gave the green light for 10- and 30-year U.S. bond yields to pick up as the Epidemic improves; investors are betting that the Fed will allow inflation to rise above the Fed’s target during the economic recovery.
Crude oil hit a two-week low, U.S. oil fell 6% at one point
During the U.S. midday trading session, U.S. WTI crude oil once fell below $61 to a low of $60.62, a new intraday low for two weeks, with a maximum intraday drop of more than 6.1%; Brent crude oil fell below $65 to an intraday low of $64.10, also a new two-week low, with an intraday drop of more than 5.7%. If the decline is maintained, international crude oil will close lower for the fifth consecutive day.
There are market views that the lower U.S. stocks and stronger U.S. dollar before the Fed’s resolution on Wednesday reflected market concerns about inflation, and this concern was also contagious to the commodities market. Also, short-term price factors reflect a relatively fragile market outlook, with WTI crude oil seeing futures gains and Brent crude oil futures discounts waning, suggesting that supply tightness in the market is easing.
In addition, on Wednesday the International Energy Agency (IEA) released its monthly report arguing that any concerns about oil shortages are misplaced and that the market will not experience a super cycle, given that the market is well supplied. This was seen as a driver of the day’s decline in oil prices.
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