(Bloomberg) — Stocks fell and bonds rose after data signaled some softening in the labor market, housing and a gauge of business outlook. Traders also continued to wade through corporate earnings and comments from Federal Reserve speakers.
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The tech-heavy Nasdaq 100 underperformed major benchmarks, with Tesla Inc. down 11% after signaling it will keep cutting prices to stoke demand even after markdowns took a significant toll on profitability. The S&P 500 headed toward its second straight drop.
The policy-sensitive two-year yield declined as much as 10 basis points to 4.14%. The dollar retreated against most of its developed-market peers. Oil wiped out almost all of the gains stemming from OPEC+’s surprise output cut amid signs of a global economic slowdown.
Fed Bank of Cleveland President Loretta Mester signaled support for another rate hike to quell inflation while flagging the need to watch recent bank stress that could crimp credit and dampen the economy. Her New York counterpart John Williams said late Wednesday that while the banking sector has stabilized, the recent stress may make it more challenging for households and businesses to access credit.
Recurring unemployment benefit claims jumped to the highest level since November 2021, adding to signs that the labor market is beginning to lose momentum. Sales of previously owned homes fell in March by more than forecast, underscoring a housing market that’s still on shaky footing despite some signs of stabilizing. US mortgage rates rose for the first time since early March.
“If the Fed stays the course, broad financial conditions should continue to tighten, the economy should decelerate into recession, and stocks should trade down sharply,” wrote Chris Senyek of Wolfe Research. “On the flip side, the biggest upside risk to our bearish call remains the Fed backing off way too soon! Although, if the Fed fails to sustainably bring down inflation, the ultimate pain will likely be much worse 12-24 months down the road.”
Corporate Highlights:
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International Business Machines Corp. gave a forecast for annual revenue in line with analysts’ projections, delivering a cautiously optimistic signal about technology spending in an uncertain economy.
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AT&T Inc. missed estimates for free cash flow.
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American Express Co. set aside more money to cover souring loans, a move that weighed on earnings.
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Blackstone Inc.’s first-quarter profit fell as dealmaking at the world’s largest alternative-asset manager slowed
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Bed Bath & Beyond Inc. tumbled as speculation grows that the embattled retailer will soon file for bankruptcy.
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D.R. Horton Inc.’s results topped expectations.
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Truist Financial Corp. and Fifth Third Bancorp. reported deposits that were broadly stable in the first quarter as banks weathered the fallout from the collapse of three lenders in March.
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Union Pacific Corp. posted profit higher than analysts’ expectations amid higher prices.
Key events this week:
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PMIs for Eurozone, Friday
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Japan CPI, Friday
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Fed’s Lisa Cook discusses economic research at an event, Friday
Some of the main moves in the market:
Stocks
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The S&P 500 fell 0.9% as of 3:25 p.m. New York time
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The Nasdaq 100 fell 1.1%
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The Dow Jones Industrial Average fell 0.6%
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The MSCI World index fell 0.6%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0957
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The British pound was little changed at $1.2431
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The Japanese yen rose 0.3% to 134.32 per dollar
Cryptocurrencies
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Bitcoin fell 4% to $28,092.72
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Ether fell 2.9% to $1,922.7
Bonds
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The yield on 10-year Treasuries declined five basis points to 3.54%
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Germany’s 10-year yield declined seven basis points to 2.45%
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Britain’s 10-year yield declined nine basis points to 3.77%
Commodities
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West Texas Intermediate crude fell 2.4% to $77.29 a barrel
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Gold futures rose 0.4% to $2,015.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee, Vildana Hajric and Cristin Flanagan.
(An earlier version corrected the direction of verbs in the headline.)
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