Stocks Shaken by Fed and Inflation Data, Dollar and Bonds Rise


  • The Nasdaq recorded a three-day rise as losses played out in markets after Fed policy and US inflation data

  • JPMorgan and Citigroup fell after earnings reports, while KB Home and Wells Fargo saw significant increases in their respective prices.

  • Dollar and bond yields end the week higher as gold holds above $1,800 an ounce.

U.S. stocks have traded lower this week after a failed recovery attempt on Wednesday after U.S. Federal Reserve Chairman Jerome Powell signaled the central bank was ready to use all available tools to fight back. against inflation.

Global stocks fell on Thursday after US inflation data showed prices rose the fastest in 40 years in 2021 with a 7% spike.

The Dow Jones Industrial Average was down 1.2%, the S&P 500 was down 0.79% and the Nasdaq composite was down 0.52% at the time of writing.

In Europe, the pan-European Stoxx 600 closed down 1%, while the German DAX lost 0.9% and the French CAC fell 0.8%. Britain’s FTSE 100 ended the week down 0.23%.

Equities: winners and losers in the week

KB Home stock soared 13% on Thursday, with the massive gains coming after the homemaker’s fourth-quarter earnings beat analysts’ estimates.

Shares of Delta Air Lines jumped 3% after the airline reported better-than-expected fourth-quarter financial results, while American Airlines and United Airlines also rose as the travel sector sought to rebound from the nervousness of the market linked to Omicron.

Ford Motor Company (F) also grabbed headlines this week as its price hit a 20-year high to catapult the automaker’s market capitalization above the $100 billion mark. The historic move for the company comes after its stock price surged above $25.87.

Tech stocks sold off again on Thursday to see steep losses for the Nasdaq wipe out year-to-date returns. Apple shares fell 1.9%, Meta Platforms fell 2% while Amazon slipped 2.4% and Microsoft cut 4.2% to highlight sector weakness.

Shares of JPMorgan and Citigroup fell on Friday as the companies reported better-than-expected earnings. Wells Fargo, which also released its fourth-quarter results on Friday, jumped about 4%.

In Asia, shares of cruise operator Genting Hong Kong fell more than 50% after the company acknowledged the possibility of defaulting on its financial obligations.

Forex: the dollar seems to be recovering after a mixed week

The US Dollar has fallen significantly this week, losing support at a key level against a basket of major currencies. The greenback struggled against the euro, sterling and Japanese yen, but pared some of the losses against eurozone and UK currencies.

The dollar index is back above 95.28, up about 0.5% and on track for another rally as stocks look to end the week lower.

Treasury yields rise

In the bond market, 10-year US Treasury yields fell mid-week from 1.80% to around 1.71%. They have since gained around 40 basis points to around 1.75%, helped by the FOMC minutes and the expected acceleration in Fed tapering.

CPI data that showed inflation at four-decade highs also added to the sell-off in stocks and other speculative markets.

Merchandise

Gold is holding above $1,810 an ounce for another week above crucial support. The price of spot gold rose to highs of $1,828 an ounce this week, helped by the selloff in stocks, although gains in the dollar held the market back.

Oil rose above $80 a barrel, with WTI crude hitting highs of $83.68 a barrel. Elsewhere, Bitcoin slipped below $40,000 before recovering later in the week to touch a seven-day high of $44,800.

Income Season

Several companies released earnings reports this week, including Delta Air Lines (DAL), KB Home (KB), Citigroup (C), JPMorgan (JPM) and Wells Fargo (WFC).

Earnings season continues next week with big banks Morgan Stanley and Bank of America, while Netflix and UnitedHealth are also expected to report.

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